In the continuation of a local New York City story that drew national attention with potential implications elsewhere, Judge Wayne M. Ozzi of State Supreme Court on Staten Island ruled on Sept. 29 that the city’s attempt to tax expensive second homes within the five boroughs, led by Mayor Zohran Mamdani, was not handled properly and must start anew. The judge agreed with a group of homeowners who had sued over the issue.
“Homeowners are being substantially harmed and penalized needlessly by D.O.F. (Department of Finance)’s method of implementing the tax law,” Ozzi wrote in his decision.
The city had enacted the new tax in June aimed at luxury second homes. The “pied-à-terre” (French for “foot on the ground,” and used in reference to secondary homes) tax was to be imposed on second homes valued above $5 million or condos and co-ops over $1 million. Now there is no clear path forward.
The ruling was hailed by Jason Haber, co-founder of the American Real Estate Association (ARA), and who took part in a major protest recently.
“Today’s ruling confirms what we said on the steps of City Hall in August: the rollout of the pied-a-terre tax was botched,” he said in a statement. “We have opposed this tax from day one. But this case was about something even more basic; whether the City follows its own rules before it puts the burden on the people it serves.
“The City published the property information of 959,710 New Yorkers and mailed notices to 17,000 homeowners, many of them seniors and New Yorkers on fixed incomes, telling them to prove they live in their own homes. ‘Guilty until proven resident’ is not how the government should treat its residents.”
Haber noted that the judge’s decision is subject to a stay, and that it is unlikely he will have the final word.
“But the message to City Hall is clear,” Haber said. “The administration should not spend the next several months defending a process that failed. The entire pied-a-terre tax should be halted. When the State Legislature reconvenes in Albany in January, it should hold hearings and give this the robust legislative process it never got. We’ve already seen what happens when legislation that is this complex is rushed together at the last minute.”
In Mamdani’s original tax plan, during the 2026-2027 and 2027-2028 tax years condos and co-ops valued between $1-3 million would have faced a 4% annual tax, with properties valued between $3-5 million facing a 5.25% annual tax. Properties valued over $5 million would have seen a 6.5% annual tax.
Haber provided additional thoughts to RISMedia on the subject:
What does this say about ARA’s ability to help get traction on major issues?
JH: Today is just a step in the right direction. It’s very likely this ruling gets challenged so it’s by no means the finish line. But the arguments made by the judge were aligned with what we said at our August press conference and during testimony to the City Council.
Have your major constituents like Compass congratulated you or said anything?
JH: Without getting into specifics, yes, my phone has been very busy since this was announced.
Will you be following up with this ruling?
JH: We are keeping a close eye on developments. The best outcome here is that the tax is halted entirely, and that Albany takes it up from square one in January all over again, but this time around they hold hearings and actually engage in the legislative process. I believe if they go about this the right way, they will better understand the implications of the tax and opt to not proceed with it.
Are there other major causes you have your eyes on?
JH: So many. We are working now on our federal legislative agenda for the next congressional session. Congress will look different in January and we want to be thoughtful about how we approach them.
