Appeals court rules for Mamdani on pied-à-terre tax, reversing lower court

An appeals court ruled in favor of New York City Mayor Zohran Mamdani’s (D) pied-à-terre tax, which would place an annual surcharge on certain second homes.

This reverses a lower court decision that found Mamdani’s Finance Department violated the plaintiffs’ due process rights through its method of determining who would pay the tax on second homes worth more than $5 million.

The tax was proposed by Mamdani and New York Gov. Kathy Hochul (D) in April, but it has faced numerous legal challenges ever since. The pair said at the time that the tax would help narrow the city’s budget deficit and would be an annual surcharge on one- to three-family homes, condominiums and co-ops owned by people who have a separate primary residence.

This lawsuit did not concern the legality of the tax but rather the notices the Finance Department sent to around 17,000 residents in the city, alerting them they were subject to the tax. The plaintiffs, a group of New York homeowners, previously argued they were not given enough time to prove if they did or didn’t qualify for the tax.

“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 wrote in a statement. “We are heartened by the Appellate Division’s ruling in the City’s favor, and we will continue working with our partners in Albany to defend this law against the ongoing challenges in Suffolk County.”

“Our commitment has not changed. We will implement the pied-a-terre surcharge fairly and efficiently, ensuring that those most able to contribute do their part to build a city that works for everyone,” he concluded.

Randy Mastro, the first deputy mayor of New York City under former Mayor Eric Adams (D), slammed Mamdani’s administration rollout of the tax, calling it “admittedly botched” in a statement to The Hill.

“The court today took the procedural offramp of standing to avoid addressing the merits of this case,” Mastro said. “To be clear, though, the ultimate day of reckoning for this ‘pied-a-terre’ surcharge will occur next month when its constitutionality will be decided. We remain confident we will prevail and put an end to this unconstitutional surcharge altogether.”

Mamdani said in July that the tax was to provide the city with needed “long-term solutions” to its fiscal challenges.