NYC Mayor Zohran Mamdani's pied-à-terre tax just got a big win in court
· Business Insider
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- The tax on second homes worth over $5 million was challenged by a lawsuit from NYC homeowners.
- The Appellate Division of the New York Supreme Court ruled in favor of the city's pied-à-terre tax.
- The tax still faces another pending lawsuit in December challenging its constitutionality.
NYC Mayor Zohran Mamdani just secured a big win — and those with luxury second homes in the Big Apple might have to pay up soon.
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On Wednesday, the Appellate Division of the New York Supreme Court ruled that the City could roll out its pied-à-terre surcharge. This comes after the tax hit a roadblock in September, after a Staten Island judge ruled in favor of NYC homeowners who sued over the rollout of the tax. The ruling indicated that the implementation of the tax — which targets second homes worth over $5 million — needed to be redone after causing confusion and the revelation of personal information. The same night, the city invoked a stay, appealing the September ruling.
The appellate court reversed the decision and ruled in favor of the city, explaining that the homeowners lacked standing and could not prove injury. The decision said the homeowners' stated "confusion has been held to be too generalized, tenuous, and ephemeral" to prove actual injury. The court also said worries about future alleged injury to these homeowners were "based on speculation about what might occur," not evidence of actual injury.
When addressing the homeowners' concerns that it would cost them time and money to prove their homes were their actual primary homes to avoid paying the tax, the court said that tax paperwork normally takes time, and no documentation was shown to substantiate these costs.
In a statement, the NYC mayor said the court prevented the attempt of the "ultrawealthy to avoid paying their fair share." Mamdani said the income from the tax will contribute to "safer streets, cleaner parks and essential public services."
Randy Mastro, a lawyer for the homeowner plaintiffs, said in a statement that it's "a shame" the court decided to revert the September decision.
"What the City has done here is unconscionable - trying to ensnare thousands of people who don't owe this surcharge into having to prove they live in their own homes or else have to pay it," he said. "Now, this lawless and chaotic data collection scheme will go unremedied."
Yet the tax has other battles to fight before it's ready for rollout.
Wealthy Florida residents with New York properties, businessman Steve Wynn and former Commerce Secretary Wilbur Ross, also filed a lawsuit against the tax, suing the state of New York in September over its constitutionality. The arguments over this lawsuit are set to take place in December.
"The ultimate day of reckoning for this 'pied-a-terre' surcharge will occur next month when its constitutionality will be decided," said Mastro. "We remain confident we will prevail and put an end to this unconstitutional surcharge altogether."
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