A Staten Island state court judge granted a temporary restraining order on August 10 pausing enforcement of New York City’s new pied-à-terre tax on high-value second homes, but the city immediately filed a motion to appeal, a procedural step that stays the lower court order and allows the surcharge’s implementation to continue while the case moves forward.
Key Takeaways
- Judge Wayne Ozzi of Staten Island Supreme Court granted a temporary restraining order pausing the pied-à-terre tax rollout on August 10, ordering the city to take down its public tax roll and halt further notices to homeowners.
- The city filed a motion to appeal within hours, which automatically stays the lower court order and allows implementation to continue pending resolution.
- Three homeowners filed the lawsuit (O’Brien v. City of New York, case no. 85217/2026) on August 7, alleging the city wrongly flagged their primary residences as subject to the surcharge.
- The Department of Finance published a database of approximately 900,000 properties and sent individual notices to roughly 17,000 homeowners, without explaining why each recipient was flagged.
- The surcharge, enacted as Article 30-C of New York State Tax Law, took effect July 1, 2026 and is projected to generate nearly $500 million annually for the city. Oral arguments are scheduled for August 31.
Three Homeowners Challenge the Rollout, Not the Tax Itself
The lawsuit was filed on August 7 in Staten Island state court by three property owners: Rachel O’Brien and Carmine Morano, both Staten Island primary residents, and Simon Hedley, a homeowner in Manhattan’s Chelsea neighborhood. The plaintiffs are represented by attorney Randy Mastro, who served as First Deputy Mayor under former Mayor Eric Adams. The complaint names Mayor Zohran Mamdani and Department of Finance Commissioner Richard Lee as defendants.
The legal challenge does not seek to overturn the pied-à-terre tax itself. Instead, it targets the administration’s rollout process. The plaintiffs argue that the Department of Finance published a database of roughly 900,000 properties on its website and mailed individual notices to approximately 17,000 homeowners identifying them as potentially subject to the surcharge. The complaint alleges the notices did not explain why each property was flagged, leaving recipients without a clear basis to understand or contest their inclusion. Hedley, one of the three plaintiffs, noted that his Chelsea apartment is his only home and primary residence, and that he purchased it 13 years ago. He filed for exemption and received confirmation within a day, but argued that the Department of Finance could have cross-referenced existing tax records before sending notices.
The Court Ordered the Tax Roll Removed, but the City’s Appeal Overrides the Pause
Judge Ozzi ruled from the bench that the notices caused irreparable harm because they did not explain the factual basis for flagging each property and warned that homeowners who failed to file for exemption would become subject to the tax automatically. Under the temporary restraining order, the city was directed to take down the public property tax roll from the Department of Finance website and barred from issuing additional notices while the order remained in effect.
The pause lasted only hours. The city filed a motion for permission to appeal the ruling the same afternoon, a procedural move that under New York law automatically stays the lower court’s order until the appeal is resolved. Mayor’s Office spokesperson Matt Rauschenbach confirmed that the city would continue with the surcharge’s implementation. The next court date is set for August 31, when oral arguments on the case will be heard. The Mamdani administration had already extended the exemption application deadline from its original date to September 18, 2026, following public backlash over the rollout.
The Tax Targets Luxury Second Homes and Is Projected at $500 Million in Annual Revenue
The pied-à-terre surcharge was enacted on May 27, 2026 as part of the 2026 to 2027 New York State budget and signed by Governor Kathy Hochul the following day. Codified as Article 30-C of the New York State Tax Law, the surcharge applies to residential properties in New York City that are not used as the owner’s primary residence. The law is structured in two phases and is set to expire on June 30, 2031 unless renewed by the legislature.
During Phase 1, which runs from July 1, 2026 through June 30, 2028, the surcharge applies to Class 1 properties (one- to three-family homes) with a Department of Finance market value of $5 million or more, at rates ranging from 0.8 percent to 1.3 percent depending on value. Class 2 properties (condominiums and cooperative apartments) with a DOF market value of $1 million or more are subject to rates between 4 percent and 6.5 percent. The Governor’s office estimated the surcharge would generate approximately $500 million per year in recurring revenue and affect roughly 10,000 properties citywide. The tax was originally proposed by Mayor Mamdani and Governor Hochul on April 15, 2026 as a measure to close the city’s budget gap without reducing public services.
The Rollout Has Drawn Criticism Across Borough Lines
The scope of the Department of Finance’s initial property database drew pointed criticism. While the surcharge is expected to apply to approximately 10,000 properties, the published roll included roughly 900,000, creating confusion among homeowners who live full time in the flagged addresses. The 17,000 individual notices compounded the concern, as many recipients said the letters arrived without clear explanations of why their properties had been identified. The administration has said the broader database reflects the city’s routine publication of its property tax roll, which is required under state law, and that only a fraction of listed properties will ultimately owe the surcharge.
Staten Island Borough President Vito Fossella characterized the rollout as one of the most mishandled policy implementations the city had undertaken, citing rallies held by homeowners across the borough. Mastro, the plaintiffs’ attorney, described the process as one that shifted the burden of proof onto homeowners to demonstrate they should not be taxed, rather than requiring the city to establish which properties qualify. At an unrelated public event on August 10, Mayor Mamdani said the administration would vigorously defend the surcharge, framing the tax as a measure that asks owners of second homes valued at $5 million or more to contribute to the city’s infrastructure and public services. The mayor noted the surcharge directly affects 17,000 homeowners out of a city of 8.5 million residents.
FAQs
Is the NYC Pied-à-Terre Tax Still in Effect?
Yes. While a Staten Island judge granted a temporary restraining order on August 10, the city filed an immediate appeal that automatically stays the lower court’s order under New York law. The surcharge remains in effect and implementation continues. The next court date is August 31.
Who Is Subject to the Pied-à-Terre Tax?
The surcharge applies to owners of residential properties in New York City that are not used as their primary residence. During Phase 1, it covers one- to three-family homes valued at $5 million or more and condominiums or co-op units with a Department of Finance market value of $1 million or more. The single determining factor is whether the property serves as the owner’s primary residence.
What Is the Deadline to Apply for an Exemption?
The Mamdani administration extended the exemption application deadline to September 18, 2026. Homeowners who believe their property was incorrectly flagged can submit documentation through the Department of Finance website at nyc.gov/npsurcharge or by calling 311.
