A trio of New York City homeowners have filed a lawsuit to delay the implementation of Mayor Zohran Mamdani’s pied-à-terre tax.
The tax is designed to target the owners of luxury second homes – condominiums and co-ops valued at a minimum of $1 million and one- to three-family homes valued above $5 million. The tax appeal process initially had an Aug. 21 deadline, which was extended to Sept. 18 after the brouhaha when the Mamdani administration published a searchable database of the addresses and names of property owners with homes valued at over $1 million. This database encompassed over 960,000 entries, and many households publicly complained they did not have second homes.
The Wall Street Journal reports plaintiffs in the 23-page lawsuit – Rachel O’Brien, Carmine Morano and Simon Hedley – said they were wrongly included in the database and are now in a beat-the-clock race to prove to the city they do not deserve to be taxed.
The lawsuit does not seek to block the tax. Instead, it seeks to delay the tax rollout, force the city to redo the process, annul the tax roll of 960,000 properties cited in the database, and void the pied-à-terre tax warning letters that have been mailed.
The plaintiffs claimed the city’s Department of Finance failed to enact due diligence in identifying the owners of luxury pieds-à-terre. Instead, the lawsuit stated the city illegally forced property owners to prove that they don’t owe the tax rather verify that for themselves.
Under New York State law, the Department of Finance is supposed to make an “initial determination” of who is subject to the tax “based on information available.” The lawsuit said the city rushed the process and “homeowners in an untenable position in the dead of summer” to prove they are not supposed to be taxed.
“The rollout of this surcharge is a debacle,” said Randy Mastro, a lawyer for the plaintiffs. “It tried to switch the burden to New York City homeowners to prove they live here.”
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