Mayor Zohran Mamdani notched a legal win Wednesday when a state appeals court threw out a lawsuit challenging New York City's new tax on high-end second homes, reversing a lower court decision that had ordered his administration to restart the tax's rollout.
The four-judge panel ruled unanimously that the homeowners who brought the suit lacked legal standing. The decision wiped out a Sept. 29 ruling by a Staten Island judge who had concluded the city mishandled the rollout and directed officials to begin the implementation process over again.
The ruling clears the way for City Hall to keep carrying out the surcharge, widely known as a pied-à-terre tax, which is a central piece of Mamdani's agenda to raise taxes on wealthy New Yorkers and help close the city's budget gap. The measure still faces separate legal challenges.
The surcharge, approved by the New York state Legislature in May, applies to qualifying second homes valued at $5 million or more for one- to three-family properties, and $1 million or more for condominiums and co-ops. The city's Department of Finance sent initial determination notices to roughly 17,000 property owners in July.
After the Staten Island ruling in September, the city appealed while continuing to implement the tax. The appellate judges found that receiving an initial tax notice or appearing on the city's property valuation list did not establish sufficient harm to justify the lawsuit. The court also rejected the homeowners' claims that the process caused concrete injuries through privacy concerns or the costs of seeking exemptions.
Mamdani welcomed the decision and accused wealthy property owners of attempting to avoid paying additional taxes. "From day one, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city," Mamdani said.
Randy Mastro, an attorney representing the homeowners, criticized the court for tossing the case without weighing the substance of their challenge. "It's a shame that, after the City admittedly botched the rollout of this surcharge, the court today took the procedural offramp of standing to avoid addressing the merits of this case," Mastro said in a statement shared with Fox News Digital. "What the City has done here is unconscionable."
Mastro added in his statement that "this lawless and chaotic data collection scheme will go unremedied." He said the surcharge faces another legal test next month over its constitutionality.
Mamdani, for his part, said his administration would continue defending the law against separate challenges in Suffolk County.
