Mamdani’s Luxury Second-Home Tax Survives: Appeals Court Tosses The Homeowners’ Suit

NEW YORK — Mayor Zohran Mamdani can move forward with his pied-à-terre tax after a state appeals court on Wednesday reversed a lower court’s ruling that the tax’s rollout was mishandled and dismissed the homeowners’ lawsuit outright. The unanimous four-judge panel of the Appellate Division, Second Department, found the seven homeowners who sued lacked standing: being placed on the city’s supplemental roll of about 900,000 properties, or receiving one of the roughly 17,000 notices sent to potentially liable owners, was not a concrete injury. The confusion surrounding the rollout, the panel wrote, was too “generalized, tenuous, and ephemeral” to count as harm.

The ruling overturns a September 29 judgment by Staten Island Justice Wayne Ozzi, who had sided with the homeowners — led by developer Kenneth Fishel of Renaissance Properties and represented by former First Deputy Mayor Randy Mastro — and ordered the city to scrap the rollout, remove the supplemental roll and nullify the notices. The homeowners had argued the city unlawfully forced owners to prove their residency instead of checking its own records first. The appeals court did not rule on that argument, and declined to decide whether the Department of Finance broke its own rule by failing to use 2024 income-tax data when choosing who received notices. It also rejected two of the city’s positions: that exempting the plaintiffs had made the case moot, and that challenges belonged only before the city’s Tax Commission. Since the original notices, the finance department has obtained 2025 income-tax data from the state, cleared 1,210 owners, and planned new letters to about 10,800 others.

The Tax, And The Fights Still Coming

The surcharge itself — proposed by Mamdani and signed into law by Governor Kathy Hochul in May — applies to one-to-three-family second homes valued at $5 million or more, and to co-ops and condos worth at least $1 million. Mamdani has said it will generate $500 million a year; Comptroller Mark Levine has estimated up to $380 million from about 11,200 properties. “Today, an appeals court rejected an attempt by the ultra-wealthy to avoid paying their fair share and ruled in favor of the city,” Mamdani said in a statement. “Owning a second home worth over $5 million should come with a responsibility to the city that makes it valuable.” Mastro responded that the court “avoided addressing the merits,” and the merits are indeed still coming: three separate challenges remain, including constitutional suits arguing the tax discriminates against non-residents — one brought in Suffolk County by some of the same plaintiffs, another by developer Steve Wynn and former Commerce Secretary Wilbur Ross. Mastro has called next month’s constitutional hearing the tax’s “ultimate day of reckoning.” Wednesday’s ruling settles the rollout. The tax itself has not yet had its trial.

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The litigation’s human detail undercut the homeowners’ theory: two of the seven petitioners, Rachel O’Brien and Carmine Morano, did not even allege they had received a notice. Mastro had argued that the notices were “nasty-grams” and that the harm lay in the effort of securing exemptions — exemptions which, the record showed, all of his clients ultimately received. The panel’s answer, in effect, was that an unwelcome letter from the tax department, followed by an exemption, is an annoyance of city life rather than an injury a court can remedy.

Sources: Commercial Observer, November 4, 2026; The Real Deal, November 4, 2026; Fortune (via OWS), November 5, 2026; Dispatch Times, appeal decision summary, November 4, 2026.