New York property owners sue mayor over luxury second home tax

New York City property owners have filed a lawsuit against Mayor Zohran Mamdani, challenging the recently implemented tax on luxury second homes owned by non-residents. The lawsuit, filed by three property owners, argues that their homes are primary residences and thus should not be subject to the 'pied a terre' tax, which targets properties valued at $5 million or more.

The plaintiffs allege they received notifications indicating their homes could be taxed, despite their claims of primary residency. Adding to their grievance, they accuse the city of making public a list of over 900,000 properties on the Department of Finance (DOF) website. This publication, they contend, has led to significant confusion and unwanted scrutiny of personal information.

The lawsuit further points out that the city sent notification letters to approximately 17,000 residences, a number the former DOF commissioner estimates is far higher than the actual number of properties subject to the tax. While the city's 'pied a terre' tax, approved in May and effective July 1, aims to generate an estimated $500 million annually, the plaintiffs seek to invalidate the DOF's public property list and prevent the tax from being imposed while the legal challenge proceeds.

The 'pied a terre' tax specifically affects properties valued at $5 million or more in the city, and cooperatives and condos valued at $1 million or more. The plaintiffs argue that the city's broad notification and public listing practices are legally flawed and cause undue harm to property owners.