More than half of the thousands of homeowners who have challenged New York City’s new pied-à-terre tax have already prevailed, raising fresh doubts about the levy’s much-touted revenue potential.
When Mayor Zohran Mamdani and Gov. Kathy Hochul unveiled the controversial surcharge on luxury second homes, they projected that it would generate more than $500 million annually. The tax applies to co-ops valued above $1 million and houses worth more than $5 million.
But the city Department of Finance told The Post that 10,000 exemption applications had been filed as of Friday morning, with 5,700 approved. Meanwhile, lawsuits and additional exemption requests continue to pour in.
“I think the bigger fiscal question is whether the city’s $500 million revenue estimate was realistic in the first place,” said Ben Williams, an attorney with Rosenberg & Ellis who represents a plaintiff.
“Once primary residences are removed and overstated market values are challenged, we may find that the amount actually collectible is significantly less than projected,” he said.
The deadline to appeal the tax, which has already been extended three times, was moved again to Oct. 13 from Oct. 6. The latest extension followed a Staten Island lawsuit filed by Randy Mastro, a lawyer and former first deputy mayor under Eric Adams.
State Supreme Court Justice Wayne Ozzi ruled in Mastro’s favor slightly more than a week ago, finding that the city must restart its rollout of the tax plan from the beginning.
The ruling said the city had sent letters prematurely to 17,000 homeowners it identified as potentially subject to the surcharge. City officials now say the number of affected homeowners is closer to 10,000 to 13,000.
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City Hall quickly appealed Ozzi’s ruling and secured a stay, allowing the Mamdani administration to continue collecting the tax while the case moves through the appeals process.
Joshua Wurtzel, a real-estate attorney and partner at Schlam Stone & Dolan LLP, said a successful challenge could undermine the city’s entire implementation of the surcharge.
“If the court’s decision ends up being upheld on appeal, which I think there’s probably at least a decent chance [of] that, then all of this kind of goes out the window,” Wurtzel said.
Two other lawsuits contend that the tax unfairly singles out owners who live outside New York. Those cases are being litigated in Long Island court and remain unresolved.
Despite the legal challenges and uncertainty surrounding the measure, a Finance Department representative reiterated the administration’s confidence in its revenue forecast, echoing comments Mamdani made in August.
“We continue to be confident in that assessment of what the annual revenue will look like,” the representative told reporters at an unrelated news conference in August.
Another Finance Department spokesperson told The Post that the pied-à-terre surcharge is intended to require luxury second-home owners to “contribute their fair share toward schools, safer streets, and the services New Yorkers rely on.”
“These meritless lawsuits have created a lot of unnecessary confusion,” the representative said. “Nevertheless, the Administration remains fully committed to ensuring that New Yorkers have the time and information they need to apply, so we are extending the deadline for exemption applications to October 13.”
“While this legal process moves forward, we will continue administering the surcharge fairly, efficiently and in full compliance with the law, as we have done from day one,” the representative said.