Wilbur Ross, Donald Trump's former commerce secretary, and casino developer Steve Wynn have launched a legal challenge to New York City's new non-primary residence surcharge, arguing the so‑called pied‑à‑terre tax unlawfully discriminates against wealthy second‑home owners who live outside the state.
The two men, both Florida residents, say the surcharge is unconstitutional because it targets non‑residents. Their filing in Suffolk County came one day before a separate court ruling ordered the city to restart the rollout of the levy.
Plaintiffs Say Tax Unfairly Targets Non‑Residents
Mr Ross and Mr Wynn argue that non‑resident owners already pay substantial property taxes while using fewer municipal services than full‑time residents.
Mr Ross's lawsuit also points to the absence of a comparable surcharge on high‑value second homes elsewhere in New York state, including the Hamptons, where he owns property. The plaintiffs say the difference in treatment raises constitutional questions.
City and state officials have argued that owners of high‑value second homes should contribute more towards the services they benefit from. Governor Kathy Hochul's office responded to the lawsuit by defending the surcharge and criticising the challenge.
Separate Court Ruling Disrupts Rollout
On Tuesday, a group of homeowners who had separately sued the city secured a ruling in their favour. They argued that officials had improperly shifted the burden onto owners to prove their properties were exempt, rather than establishing which properties were subject to the surcharge.
Justice Wayne Ozzi ordered the city to cancel the existing notices and redo the process after properly determining which properties were covered.
The ruling concerned implementation only. It did not invalidate the surcharge itself.
Mayor Zohran Mamdani's administration says it will continue defending and implementing the surcharge while challenging the decision. It has appealed the decision and invoked a stay that pauses the order while the appeal proceeds.
How the New Surcharge Will Work
The surcharge became law through the state budget and was announced by Mr Mamdani and Ms Hochul in April. It applies to certain non‑primary residences for the 2026‑27 and 2027‑28 property tax years.
It covers one‑, two‑ and three‑family homes with a Department of Finance value of more than $5m, and condominium or co‑operative units valued at $1m or more. Exemptions apply in certain circumstances, including where a property is occupied by a tenant or an immediate family member, and for some owners holding property through entities.
The city has projected that the surcharge will raise about $500m a year. The city comptroller, Mark Levine, said the annual figure could plausibly reach $510m but identified significant uncertainties. His analysis suggested collections could instead fall between $340m and $380m.
The mayor's office has promoted the measure as a way to help close the city's budget gap, and higher taxes on wealthy property owners have been a central part of Mr Mamdani's fiscal agenda.
The litigation has added legal uncertainty to the surcharge's implementation, and it could affect both the timing and the amount of revenue the city ultimately collects.
