On September 29, three things happened to New York City's pied-à-terre tax in a single day. A Staten Island judge ruled the city's rollout was arbitrary, capricious, and unlawful. Casino developer Steve Wynn and former Commerce Secretary Wilbur Ross filed a lawsuit calling the tax unconstitutional. And a second group of homeowners, backed by the Real Estate Board of New York, filed their own constitutional challenge.

The city appealed the ruling the same evening, invoked an automatic stay, and said it would continue implementation. The October 6 exemption deadline currently remains in effect.

What the Court Decided

Justice Wayne M. Ozzi of Richmond County Supreme Court did not strike down the pied-à-terre tax. The law itself is not at risk from this ruling. What he struck down was the process the Department of Finance used to identify who owes it.

In July, the DOF published a supplemental roll of over 900,000 properties potentially subject to the surcharge and mailed notices to approximately 17,000 owners. Judge Ozzi found that list "arbitrary, capricious, and without legal support." The DOF, he wrote, "took the lazy route" by relabeling the regular real estate tax roll rather than conducting the individualized residency determinations the law requires.

The numbers support the characterization. After lawsuits were filed and the DOF was forced to check its own income tax records, it subsequently cleared 35% of the 17,000 recipients — approximately 6,000 homeowners — of any liability. They had been sent notices demanding they prove they live in their own homes, when the DOF's own data would have shown they did.

"Homeowners are being substantially harmed and penalized needlessly by DOF's method of implementing the tax law," Ozzi wrote.

The ruling ordered the city to cancel all previously mailed notices, remove the current supplemental roll from its website, and conduct an individualized initial determination using all available tax information before sending any new notices. New notices must specify the factors used, disclose the supporting documents, and advise owners of their right to challenge.

The city filed its appeal at 5:45 PM the same day.

The Constitutional Challenge

Separate from the rollout fight, Wynn and the Rosses filed suit in Suffolk County Supreme Court arguing the tax itself is unconstitutional. The case, Ross v. State of New York, names the state rather than the city as defendant because the constitutional arguments require it.

Their claims are substantive and were anticipated in this series. The tax violates the Privileges and Immunities Clause and the Dormant Commerce Clause by explicitly targeting non-residents. It violates the New York State Constitution's cap on real estate tax revenue. And it was enacted in violation of home rule procedures for laws aimed at a single city.

Ross faces an annual surcharge of $83,531 on his Manhattan property. Wynn faces $183,094.

Governor Hochul's office pushed back directly: "When Steve Wynn and Wilbur Ross try to cast themselves as sympathetic figures in a fight over paying their fair share on multimillion-dollar second homes, they're making the case for the pied-à-terre tax as well as anyone could."

The response is politically effective. It is not a legal argument.

Ross made a point worth separating from the messenger: "It's hard to argue that the pied-à-terre people use more police, more firemen, more sanitation than people who are here all year round." The constitutional claim isn't about sympathy. It's about whether a state can impose discriminatory tax burdens on people who, by definition, cannot vote against the legislators imposing them.

"If this tax were held to be constitutional," the complaint states, "then every tax jurisdiction in the United States would be free to enact similarly discriminatory tax measures that favor their own residents in the ownership, maintenance, and sale of residential real estate."

That argument applies whether the plaintiff is Wilbur Ross or a middle-income retiree who moved to Florida and kept a modest apartment in Queens.

What This Means for Owners Right Now

The tax is still in effect. The city's appeal and resulting stay mean the DOF rollout continues while the Appellate Division, Second Department considers the matter.

The October 6 exemption application deadline currently remains in place. If you received a DOF notice and believe your property qualifies for an exemption, filing by that deadline is advisable regardless of how the appeal resolves. A timely filing with complete, supportable documentation preserves your position in either direction.

If you haven't received a notice, that doesn't mean you're clear. The DOF's review window remains open and the department has six years to audit primary residence claims.

Two additional points from attorneys tracking the case closely. First, owners who have both a valuation dispute and a residency dispute cannot pursue both simultaneously before the DOF and the Tax Commission. Choosing the wrong forum waives the right to the other. Second, documentation submitted in response to a notice can carry penalties for negligent submissions. Get professional guidance before filing anything.

The Pattern

We noted in our first post on this subject, published in April when the proposal was announced, that the 2019 version of this legislation had more legislative specificity than the 2026 version despite less political momentum. The current administration had maximum support and minimum detail.

What's unfolded since confirms that assessment. A law passed in six weeks with full text released days before the vote. A DOF that published 900,000 names rather than conducting the individualized review the legislation required. A 35% error rate on the initial notices. A court ruling that described the process as "the lazy route." A constitutional challenge filed the same day by plaintiffs who can afford to litigate it to the Supreme Court if necessary.

The tax may well survive. The constitutional questions are genuinely open, and the Appellate Division may reverse Ozzi's ruling on the rollout. But the gap between the political ambition behind this law and the administrative capacity deployed to implement it is, at this point, a matter of public record.

Brandon Mason is a residential real estate broker at Douglas Elliman, working across Manhattan and Brooklyn. This is the latest update in a series tracking the NYC pied-à-terre tax from proposal through implementation.