NYC Pied-à-Terre Tax Rollout Temporarily Blocked  

A real estate industry that has sounded alarms over New York City Mayor Zohran Mamdani’s pied-a-terre tax harming the luxury residential market got a momentary reprieve Monday.

Staten Island Supreme Court Justice Wayne Ozzi blocked the Mamdani administration’s rollout of a controversial surcharge on second homes worth more than $5 million and ordered the removal of nearly 1 million properties the city had posted online affected by the tax. The decision, which was issued in response to a lawsuit filed by homeowners last week, was appealed by the city Monday evening, which automatically triggered a stay of the ruling until an appeal is heard on Aug. 31. 

Ben Williams, who leads the property tax department at law firm Rosenberg & Estis, cautioned that no matter how the legal drama plays out, the tax is likely to still take effect. 

“This case is more likely to affect the timing of the tax than its long-term future,” Williams said in a statement. “If the City prevails, it will essentially be business as usual and implementation will continue. If the plaintiffs prevail, the City may have to pause, address the procedural deficiencies identified by the court, and reset the process, but the tax itself is unlikely to disappear.”

Robert Knakal, founder, chairman and CEO of BK Real Estate Advisors,  said the rollout of the pied-a-terre tax was “misguided” and described the issue as “nothing more than being able to win a political talking point.”

The pied-a-terre tax was approved by the New York State Legislature in May and is projected to raise $500 million in revenue for the Big Apple, according to an analysis by New York City Comptroller Mark Levine. The policy has sparked concerns, however, from many real estate professionals about potential negative effects of luxury developers and buyers avoiding New York City despite the luxury market seeing an uptick in June. 

“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,” Mamdani spokesperson Matt Rauschenbach told the Wall Street Journal. “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.”

Andrew Coen can be reached at acoen@commercialobserver.com.