A judge has temporarily blocked Zohran Mamdani’s pied-à-terre tax, which would place a surcharge on second homes in New York City, dealing a blow to the progressive New York City mayor after homeowners sued over the policy.
The tax would apply to people who own, but do not reside full-time in, any house worth more than $5m, or a condominium or cooperative unit worth at least $1m.
The temporary, emergency pause comes after a group of homeowners filed a lawsuit against the mayor and the city’s finance director over the tax last week. They allege the city wrongly identified their homes as potentially subject to the surcharge despite the properties serving as their primary residences.
“The city has arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the surcharge,” reads the complaint filed on Friday.
The temporary pause was issued by a state judge on Monday, the Wall Street Journal reported, and means the city is barred from issuing any additional letters notifying homeowners of their potential tax liability and taking down a public list of properties. The city published a tax roll of about 960,000 owners who could be subject to the tax. It also sent notices to 17,000 addresses.
Announcing the tax in April, Mamdani and Kathy Hochul, the New York governor, said it was expected to generate $500m in annual revenue. Mamdani’s critics accuse the democratic socialist mayor of targeting the wealthy, while others have welcomed the tax, seeing it as a helpful way to raise revenue from affluent property owners in a city grappling with a high cost of living.
The proposed tax on multimillion-dollar second homes, known as pied-à-terres, comes as Democrats are trying to address voter concerns about affordability ahead of this year’s midterm elections.
Critics, including prominent business leaders, Republicans and some moderate Democrats, have warned that slapping new taxes on rich people who maintain apartments and townhouses in New York, but don’t consider it their primary home, will lead the very wealthy to abandon the city.
In a statement to the Guardian, Matt Rauschenbach, a spokesperson for Mamdani, criticized the ruling and said the mayor’s office planned to appeal.
“We disagree with today’s ruling, but we are confident in both the pied-à-terre surcharge and the City’s ability to implement it fairly and effectively,” Rauschenbach said. “This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from. The Law Department will appeal the ruling immediately which will stay the order, and the City will continue with the pied-a-terre’s implementation.”
Associated Press contributed reporting
