More than half of the homeowners who have challenged New York City’s new pied-à-terre tax have already secured exemptions, raising fresh doubts about how much money the controversial measure can ultimately generate.
When Mayor Zohran Mamdani and Gov. Kathy Hochul introduced the levy on high-end second homes, they projected that it could bring in more than $500 million annually. The tax applies to co-ops valued above $1 million and houses worth more than $5 million.
Yet the city Department of Finance told The Post that roughly 10,000 exemption applications had been submitted by Friday morning. About 5,700 had been approved, while additional appeals and exemption requests continue to arrive.
Ben Williams, an attorney with Rosenberg & Ellis who represents one of the plaintiffs, questioned whether the city’s original revenue forecast was ever realistic.
“The larger fiscal issue is whether the city’s $500 million projection was grounded in reality,” Williams said. “After primary residences are excluded and inflated property valuations are contested, the amount the city can actually collect could be far below the estimate.”
The deadline for filing an appeal, which has already been changed three times, was extended once more to Oct. 13, after a Staten Island lawsuit brought by Randy Mastro, a former first deputy mayor under Eric Adams.
State Supreme Court Justice Wayne Ozzi sided with Mastro more than a week ago, ruling that the city must restart the rollout of the tax program.
Ozzi found that the city had sent notices too soon to approximately 17,000 homeowners it believed might be subject to the tax. Officials have since revised that estimate, saying the number of potentially affected properties is closer to 10,000 to 13,000.
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City Hall quickly appealed the ruling and obtained a stay, allowing the Mamdani administration to continue collecting the surcharge while the legal challenge moves through the appellate courts.
Joshua Wurtzel, a real-estate attorney and partner at Schlam Stone & Dolan LLP, warned that a successful challenge could undermine the city’s entire tax program.
“If the ruling is ultimately affirmed on appeal — and I believe there is a meaningful possibility that will happen — then the entire process could effectively be wiped away,” Wurtzel said.
Two additional lawsuits accusing the city of unfairly singling out out-of-state property owners are also pending in Long Island court.
Despite the growing legal uncertainty and the large number of successful exemption requests, the Finance Department continues to defend the projected revenue from the pied-à-terre tax.
“We remain confident in our assessment of the surcharge’s annual revenue potential,” a Finance Department representative told reporters at an unrelated news conference in August.
Another department spokesperson said the surcharge is intended to require owners of luxury second homes to “pay their fair share” for schools, public safety and other services used by New Yorkers.
“These meritless lawsuits have caused significant and unnecessary confusion,” the spokesperson said. “Even so, the administration is committed to giving New Yorkers enough time and information to apply, which is why the exemption deadline has been extended to Oct. 13.”
The spokesperson added that the city will continue enforcing the surcharge “fairly, efficiently and in full compliance with the law” while the court proceedings continue.
