NEW YORK CITY— The Mamdani administration can move ahead with its rollout of a new tax on high-value second homes after a state appeals court overturned a ruling that would have forced the City to restart the process.
A four-judge panel of the Appellate Division's Second Department unanimously ruled Wednesday that the property owners who challenged the rollout lacked legal standing because they failed to show how the city's implementation of the tax had directly harmed them.
The decision clears the way for the Department of Finance to continue preparing tax bills ahead of a Nov. 15 mailing deadline.
The pied-à-terre tax applies to non-primary residences in New York City with assessed values of at least $5 million for one- to three-family homes and at least $1 million for condominiums and cooperative apartments.
Homeowners filed suit in August, accusing the Department of Finance of violating the state law establishing the tax.
They argued the agency improperly shifted the burden of proving primary residency onto property owners instead of determining residency status itself.
State Supreme Court Justice Wayne Ozzi sided with the homeowners in September.
He ordered the city to conduct additional work to identify which properties qualified for the tax and send revised notices explaining the evidence behind its determinations.
The city appealed, allowing it to continue its existing rollout while the case moved through the courts.
In Wednesday's decision, the appeals panel pointed to a provision in the state law allowing property owners to submit evidence proving a home serves as their primary residence.
The judges concluded the Legislature anticipated some initial notices would go to owners who ultimately qualified for an exemption.
"In providing owners of covered properties the right to provide evidence of primary residency, the State Legislature must have anticipated that the list of notice recipients would not be exact or flawless; otherwise, there would be no purpose to providing an exemption procedure at all," the judges wrote.
Two other lawsuits challenging the levy remain pending. Both question the constitutionality of the tax itself.
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