NYC Homeowners Sue Mamdani Over New Pied-à-Terre Tax

Three New York City homeowners have sued Mayor Zohran Mamdani and city finance officials over the rollout of a new tax on high-value secondary residences, claiming their primary homes were wrongly included among properties being reviewed for the surcharge.

The lawsuit, filed Friday in New York State Supreme Court in Richmond County by Rachel O’Brien, Carmine Morano and Simon Hedley, seeks to invalidate notices sent to some property owners and remove a supplemental property roll published by the Department of Finance.

The legal action stems from the city’s rollout of a new pied-à-terre tax created as part of New York’s fiscal 2027 budget. The surcharge applies to certain high-value New York City properties that are not used as a primary residence and was incorporated into the city budget as a new source of revenue.

For the first two property tax years, the surcharge may apply to one-, two-, and three-family homes valued by the Finance Department at more than $5 million and condominium or cooperative units valued at $1 million or more. Properties used as a primary residence are generally exempt, making residency a key factor in determining whether the additional tax applies.

As part of the rollout, the Finance Department released a supplemental roll on July 24 containing information tied to more than 900,000 residential properties across the city. Separate notices went to about 17,000 owners whose properties were identified as potentially subject to the surcharge, requiring them to submit residency information to avoid the charge.

O’Brien and Morano claim their Staten Island homes appeared on the public roll even though they live there as their primary residences. Hedley says his Manhattan home was listed and that he received one of the letters requiring proof of residency. According to the petition, Hedley has used the property as his primary home for more than a decade.

City officials say inclusion on the broader roll does not mean a homeowner owes the surcharge. The Finance Department says most properties on the list will not be subject to the tax.

State law requires the Finance Department to first determine, using information already available to the agency, that a property is not being used as a primary residence. The owner must then be notified and given a chance to provide records showing the home should be exempt.

According to the petition, the city reversed that sequence by requiring some residents to prove their homes were primary residences before the department had adequately determined otherwise. The homeowners claim officials already had access to tax records and other information that could have been considered before the notices were sent. Their challenge targets how the city is administering the surcharge, rather than the legality of the tax itself.

O’Brien, Morano and Hedley brought the case under Article 78, a New York law that allows courts to review whether government agencies acted within their authority and followed the law. The lawsuit asks the judge to invalidate the roll and notices, require the city to remove the list from its website and pause further action based on the disputed materials while the case proceeds.

Mamdani and Finance Commissioner Richard Lee extended the deadline for homeowners who received notices from August 21 to September 18 after concerns were raised about the rollout. The Finance Department says residents may submit tax returns, government identification or other records showing that a property is their primary residence.

Matt Rauschenbach, a spokesperson for Mamdani, said the department has been working to answer questions, provide assistance and make sure residents who may be subject to the surcharge have the information they need. He also said the city’s Law Department is prepared to defend the administration against the lawsuit.

A Richmond County judge is expected to hear arguments Monday on the homeowners’ request for a temporary restraining order. The September 18 deadline for property owners who received notices remains in place.