Topline
A judge sided with a group of homeowners on Tuesday and found that New York botched its rollout of a pied-a-terre tax on second homes earlier this year—just as the tax faces new legal challenges, including a lawsuit filed by former Commerce Secretary Wilbur Ross and billionaire casino founder Steve Wynn, which claims the tax is unconstitutional because it targets out-of-state residents.
Mayor Zohran Mamdani’s pied-a-terre tax is facing a new legal challenge from billionaire Steve Wynn and former Commerce Secretary Wilbur Ross.
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Key Facts
Judge Wayne Ozzi ordered the state to redo implementation of the tax, a key policy pushed by Mayor Zohran Mamdani and Gov. Kathy Hochul, finding homeowners were “substantially harmed and penalized needlessly” by the previous rollout, according to the decision quoted by the New York Times.
In a statement sent to Forbes, Randy Mastro, the lawyer representing a group of Staten Island homeowners challenging the implementation of the tax, praised the decision and said New York City “botched this rollout and should have just admitted the errors and fixed its own mistake, instead of wasting time and taxpayer dollars by fighting it in court.”
Meanwhile, a suit filed on Monday in Suffolk County Supreme Court by Ross, the commerce secretary during President Donald Trump’s first term, his wife Hilary Geary Ross and Wynn argued the new tax imposes “discriminatory burdens” on out-of-state residents because they “by definition, cannot vote against lawmakers imposing that new tax.”
Crucial Quote
Ross told Forbes he believed the tax is unconstitutional, violating the interstate commerce clause. “They are, by definition, taxing income from activities outside of New York,” Ross said, adding “they’re not entitled to do that.” Ross also argued Mamdani was wrong when claiming second homeowners do not pay their fair share in taxes, calling the claim “clearly untrue.” Ross noted out-of-state homeowners still pay property taxes, but do not use the resources funded by tax revenue that residents take advantage of, such as health care, welfare and public schools. “It’s hard to argue that the pied-a-terre people use more police, more firemen, more sanitation than people who are here all year round,” Ross said.
Big Number
$183,094.69. That’s how much Wynn was charged under the new tax, according to the lawsuit filed on Monday. The Ross family was charged $83,531.52, according to the filing, which also notes all three plaintiffs are residents of Florida.
Key Background
New York’s pied-a-terre tax imposes an additional tax on second homes in New York City valued at over $5 million, as well as co-ops or condos valued over $1 million. Properties are exempt from this tax if they are listed as primary residences or leased as rental units. The city identified these properties earlier this year and sent notices out to homeowners, but that effort was challenged in a lawsuit brought by homeowners, including some who said the city misidentified their primary residences.
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