Authored by: Stephanny Avshalomov
A lot has happened since New York City’s Non-Primary Residence Property Surcharge — the so-called “Pied-à-Terre Tax” — took effect on July 1, 2026.
Now, a new court decision has added another layer of uncertainty for property owners.
On September 29, 2026, Justice Wayne M. Ozzi of the New York State Supreme Court, Richmond County, granted a petition challenging the New York City Department of Finance’s (“DOF”) implementation of the Pied-à-Terre Tax.
The 22-page Decision and Order [1] found, among other things, that the Department of Finance’s methods for identifying properties potentially subject to the surcharge and notifying property owners were improper and, in certain respects, arbitrary and capricious and inconsistent with due process requirements.
This lawsuit did not challenge the legality of the surcharge itself, although separate litigation has raised challenges.[2] Instead, the Court’s decision requires the City to revisit its process for determining which properties are subject to the surcharge and to undertake the required individualized determinations before issuing new notices.
The City has already filed a notice of appeal, which triggers an automatic stay of the Court’s Order. Randy Mastro, counsel for the homeowners, appears to take a different position and is expected to ask the appeals court later this week to rule on whether the stay can take effect.[3]
As a result, the practical effect of the ruling remains uncertain and may change as the appeal proceeds or as the Court or DOF issues further guidance or orders.
In the meantime, prudent guidance is to proceed with October 6, 2026 deadline in mind. The Department of Finance’s webpage currently identifies that date on its webpage as the deadline for submitting exemption applications.
For informational purposes only, below is a brief overview of the key findings and directives included in the Court’s Order:
Key Findings of the Court:
- The Supplemental Roll: The DOF published a list of over 900,000 properties on its website labeled as possibly subject to the surcharge, when only approximately 17,000 properties were actually subject to it (likely even below 10,000) — meaning 98-99% of the listed properties were not subject to the surcharge. The Court ruled this publication was capricious and without legal support and ordered the DOF to remove the current Supplemental Roll and replace it with a narrower list reflecting only those properties actually subject to the surcharge.
- The Mailed Notices: The DOF sent approximately 17,000 notices to property owners asserting they may owe the surcharge. The Court found that the DOF failed to properly make individualized “initial determinations” regarding whether properties served as primary residences before sending these notices. Specifically, the DOF refused to consider available 2024 income tax return data when making these determinations, even though the governing statutes and the DOF’s own rules contemplated using such tax data. The Court found this refusal clearly arbitrary and contrary to law and ruled that the DOF improperly shifted the burden to homeowners to prove their residency rather than conducting proper individualized assessments first.
Among Other Directives, the Court Ordered:
- All previously mailed notices are canceled
- The Supplemenetal Roll must be removed and replace
- The Department of Finance must make the required individualized determinations before issuing new notices
- New notices, if sent, must explain what factors and information were considered in the Department’s determination and disclose the records supporting that determination.
Goetz Platzer LLP is continuing to monitor these developments. Our attorneys are available to assist property owners in evaluating the potential applicability of the surcharge and understanding the implications of the recent decision and subsequent developments.
This alert is provided for informational purposes only and does not constitute legal or tax advice. The information above reflects developments as of September 30, 2026, 9:30 AM EST and is subject to change as a result of further court proceedings, appellate action, or guidance from the Department of Finance and New York City.
[1] Decision and Order. O’Brien et al. v. City of New York et al., Index No. 85217/2026 (Sup. Ct. Richmond Cnty.) (NYSCEF Doc. No. 34, filed September 29, 2026).
[2] See https://www.nytimes.com/2026/09/29/nyregion/nyc-second-home-tax-lawsuit.html.
[3] https://www.thecityreporter.nyc/2026/09/29/judge-stops-mamdani-pied-a-terre-tax-rollout/.
