A New York appeals court has dismissed a legal challenge to Mayor Zohran Mamdani’s pied-à-terre tax rollout, ruling that the homeowners who brought the case had not demonstrated a concrete injury.
The unanimous decision by a four-judge panel of the Appellate Division, Second Department, overturned a judgment that had granted the homeowners injunctive and declaratory relief. The panel denied their petition and dismissed the case after hearing arguments the previous week.
Seven homeowners, represented by former First Deputy Mayor Randy Mastro, sued New York City in August. They challenged the Department of Finance’s publication of a supplementary roll covering about 900,000 properties, along with roughly 17,000 notices sent to owners who might be liable for the surcharge.
The homeowners argued that the city had made property owners prove they lived in their homes instead of first checking information already held in its records. The appeals court did not rule on that issue, finding instead that the claimants lacked standing to bring the case.
Being listed on the roll or receiving a notice was not sufficient evidence of harm, the judges said. Court documents described the notice as serving “an informational purpose”, comparable to a debt collection letter, and said lawmakers must have expected the list of recipients would not be completely accurate because an exemption process had been created.
The panel also rejected arguments that confusion surrounding the tax rollout amounted to a legally recognisable injury. It said the alleged harm was too “generalized, tenuous, and ephemeral”, while the homeowners had provided no evidence that their details had been misused or that they faced stalking or fraud.
It noted that the city’s annual assessment rolls already include each owner’s name, assessed value and market value. The judges also said the time and expense involved in applying for an exemption did not establish harm, particularly as the homeowners had not documented or quantified their costs.
Two of the seven petitioners, Rachel O’Brien and Carmine Morano, did not allege that they had received a notice. The remaining five were granted exemptions after the lawsuit was filed.
The appeals court rejected two arguments made by the city. It found that the exemptions did not make the case moot and disagreed that the tax law restricted challenges to appeals before the city’s Tax Commission.
However, the panel declined to decide whether the Department of Finance had breached its own rule by failing to use 2024 income-tax data when selecting recipients for the notices.
Other challenges to the pied-à-terre tax
The ruling does not resolve the tax’s wider legal disputes. Three separate challenges remain, while the city has altered its approach since the original notices were sent.
After receiving early 2025 income-tax data from the state on 12 August, the Department of Finance cleared 1,210 owners and said it would send new letters to about 10,800 others. More than 8,800 exemption requests have now been granted, according to the material provided.
Comptroller Mark Levine previously estimated that the surcharge could raise up to $380 million from about 11,200 properties. Mr Mamdani has said it will generate $500 million a year.
Responding to the ruling, Mr Mamdani said the court had “rejected an attempt by the ultrawealthy to avoid paying their fair share”. He added: “But owning a second home worth over $5 million should come with a responsibility to the city that makes it valuable.”
The mayor said the city would continue defending the law against ongoing challenges in Suffolk County, brought by “some of the same uberwealthy interests whose arguments just lost in court today”.
“We will implement the pied-à-terre surcharge fairly and efficiently, ensuring that those most able to contribute do their part to build a city that works for everyone,” he said.
