More than half of homeowners who appealed New York City’s new pied-à-terre tax have already won exemptions, city officials confirmed Friday.
The Department of Finance disclosed that 5,700 of roughly 10,000 exemption applications filed so far have been approved, a success rate that legal experts say could gut the levy’s projected $500 million annual haul. The figure was touted by Mayor Zohran Mamdani and Gov. Kathy Hochul when they announced the controversial surcharge on luxury second homes earlier this year.
Ben Williams, a plaintiff lawyer at Rosenberg & Ellis, questioned whether the half-billion-dollar estimate was ever grounded in reality. “I think the bigger fiscal question is whether the city’s $500 million revenue estimate was realistic in the first place,” he said. “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 added.
The tax applies to co-ops worth more than $1 million and houses valued above $5 million that are not owners’ primary residences. City officials initially sent letters to 17,000 homeowners they believed could be subject to the surcharge, though that number has since fallen to between 10,000 and 13,000.
A separate legal challenge from Randy Mastro, a former first deputy mayor to Eric Adams, has thrown the entire rollout into jeopardy. Mastro filed suit on Staten Island and won a ruling from state Supreme Court Justice Wayne Ozzi ordering the city to restart its implementation from scratch. Ozzi found that officials had prematurely blasted out notification letters before proper procedures were complete.
City Hall appealed Ozzi’s decision immediately and secured a stay, allowing collection efforts to continue while the case winds through higher courts. The appeals deadline for homeowners seeking exemptions has been pushed three times already, most recently to October 13 from October 6 following Mastro’s lawsuit.
Joshua Wurtzel, a real-estate lawyer and partner at Schlam Stone & Dolan LLP, warned that the appellate outcome could obliterate the tax entirely. “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 additional lawsuits arguing the tax illegally targets out-of-state owners are pending in Long Island court and remain unresolved.
The Finance Department has maintained public confidence in the revenue projection despite the mounting exemptions and litigation. “We continue to be confident in that assessment of what the annual revenue will look like,” a representative told reporters at an August press conference, repeating a stance Mamdani had voiced earlier that month.
Another department spokesperson defended the policy as a matter of equity. “The pied-a-terre surcharge simply asks luxury-second-home owners to contribute their fair share toward schools, safer streets, and the services New Yorkers rely on,” the representative said. “These meritless lawsuits have created a lot of unnecessary confusion. 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.”
The same spokesperson added that officials would “continue administering the surcharge fairly, efficiently and in full compliance with the law, as we have done from day one.”
The tax was announced as a marquee revenue generator for the Mamdani administration, with the mayor and governor jointly promoting its potential to fund city services by targeting wealthy non-resident property owners.
The October 13 exemption deadline now stands as the next key date for homeowners seeking relief while the Mastro appeal and other lawsuits proceed.