New York City Mayor Zohran Mamdani’s effort to impose a new tax on wealthy property owners hit a legal roadblock Monday after a judge temporarily halted the rollout of the controversial levy.
Staten Island Supreme Court Justice Wayne Ozzi issued a temporary restraining order blocking the city from taking further action on its pied-à-terre surcharge until an Aug. 31 hearing.
The tax targets certain high-value properties that are not used as their owners’ primary residences and is projected to generate roughly $500 million annually for New York City.
The ruling came after three homeowners — Rachel O’Brien, Carmine Morano and Simon Hedley — filed a lawsuit Friday challenging how the Mamdani administration implemented the tax.
The plaintiffs argued that the city’s rollout created widespread confusion and improperly placed the burden on homeowners to prove that their properties were their primary residences.
City officials initially published a database containing more than 900,000 potentially affected homeowners. Mamdani subsequently told wealthy New Yorkers to “check your mailbox when you’re back in the five boroughs because you’ve got mail.”
But the vast majority of properties on the original list reportedly did not meet the city’s criteria for the surcharge.
The city later sent revised notices to approximately 17,000 homeowners warning that they could face five-figure tax bills unless they requested exemptions.
Ozzi criticized the city’s handling of the process, ruling that officials should have made individualized determinations before sending notices to property owners.
“No law permitted or required the City to publish such a list of the names, addresses and property values of more than 900,000 New York City homeowners, or to publicize that list through an irregular, mid-year publication,” Ozzi wrote.
The judge ordered the city to remove the online list and barred officials from taking action based on the list or mailed notices while the legal challenge proceeds.
The lawsuit does not directly challenge the legality of the pied-à-terre tax itself. Instead, the case centers on how the Mamdani administration implemented it.
The surcharge applies to three-family homes valued at $5 million or more and condos and co-ops valued at $1 million or more when the properties are not used as primary residences.
Rates increase based on property value, reaching as high as 1.3% for qualifying single-family homes valued above $25 million and 6.5% for qualifying condos or co-ops valued above $5 million.
The Mamdani administration defended the policy and vowed to fight the court’s decision.
“We disagree with today’s ruling, but we are confident in both the pied-a-terre surcharge and the city’s ability to implement it fairly and effectively,” Mamdani spokesman Matt Rauschenbach said.
“This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from,” he added.
Rauschenbach said the city’s Law Department would immediately appeal the ruling.
The plaintiffs and their supporters celebrated the temporary order.
Attorney Randy Mastro, who filed the lawsuit, said the ruling had “vindicated the rights of hundreds of thousands of New York City homeowners who were subjected to a process they never should have been a part of in the first place.”
New York City Councilman Frank Morano also praised the decision. His wife, Rachel, and father, Carmine, are plaintiffs in the lawsuit.
“Government has to follow the law, too,” Morano wrote on Facebook.
The dispute follows Mamdani’s broader campaign to increase taxes on wealthy New Yorkers. He unveiled the pied-à-terre proposal outside billionaire Ken Griffin’s Manhattan penthouse on Tax Day, according to the Daily Mail.
Monday’s ruling does not permanently eliminate the tax. Instead, it temporarily halts the challenged rollout while the case proceeds, with the next hearing scheduled for Aug. 31.
