- A state judge ruled that New York City must redo its rollout of the surcharge on second homes worth $5 million or more, though he did not strike down the tax.
- The ruling halts action on notices sent to about 17,000 residents and forces the city to pull an online tax roll covering roughly 900,000 properties.
- Separate constitutional challenges from Wilbur Ross, Steve Wynn and other homeowners could threaten the levy itself, adding uncertainty to the luxury second-home market.
New York City must redo the rollout of its new pied-à-terre tax, a state judge ruled Sept. 29, 2026, according to The Wall Street Journal.
Justice Wayne Ozzi of Staten Island didn’t strike down the surcharge on luxury second homes, but the decision is a major blow to one of Mayor Mamdani’s signature policies. The city plans to appeal, which would temporarily keep the ruling from taking effect.
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A Rollout Under Fire
The tax applies to New York City homes worth $5 million or more that don’t serve as the owner’s primary residence. The city’s Department of Finance determines who owes it, drawing on information such as tax returns and property assessments.
Plaintiffs argued the city unlawfully shifted the burden onto homeowners to prove their residency and ignored tax data that would have shown thousands weren’t eligible. Ozzi agreed, writing that homeowners were being harmed and penalized needlessly by the city’s implementation.
The Details
The ruling blocks further action on notices already sent to about 17,000 New Yorkers and forces the city to take down an online tax roll of roughly 900,000 properties. The city may instead publish a narrower list of properties actually subject to the surcharge.
Ozzi ordered a more targeted approach using the latest tax records, and new notices must explain how the city reached its conclusion. The administration had already begun adjusting, mailing 1,210 follow-up letters in August 2026 to residents who were wrongly identified.
A Constitutional Challenge
Former Commerce Secretary Wilbur Ross and casino developer Steve Wynn went further, filing suit in state court on Sept. 28 to overturn the tax entirely. They argue it discriminates against nonresidents who can’t vote against the lawmakers imposing it.
The complaint also contends that part-time residents already pay property taxes while using fewer city services like schools and transit, and that labeling the levy a surcharge let lawmakers sidestep the state’s 2.5% cap on New York City property tax increases.
Both live in Florida and received notices in July: Ross faces a bill of about $83,500 and Wynn about $183,000. Another group of homeowners filed a separate constitutional challenge on Sept. 29, months after New York approved the tax on luxury second homes.
Why It Matters
James Whelan, president of the Real Estate Board of New York, called the ruling an important victory and said the legal challenges are far from over. For owners and buyers of high-end second homes, the fight leaves both the rollout and the tax itself in question.
The levy is part of Mamdani’s push to close budget gaps by raising taxes on the wealthy, which has deepened his clash with the city’s business elite. It also lands as many owners absorb rising property tax bills as building abatements expire.
What’s Next
Hochul’s spokeswoman, Jennifer Goodman, said Ross and Wynn casting themselves as sympathetic figures over multimillion-dollar second homes only strengthens the case for the tax. Ross, who also owns homes in the Hamptons, Palm Beach, London and Paris, said he has no contingency plans for his New York residence.
Expect the city’s appeal to pause Ozzi’s order while the case moves forward. Gov. Hochul’s office said the state is prepared to defend the tax, and Ross and Wynn are asking the court to overturn it and cover their legal costs.
