The city is continuing to enforce the pied-à-terre tax while it appeals a judge's order that would pause parts of the rollout. That's the state of play as of early September, and it's worth a closer look, because the surcharge is about to show up on tax bills for thousands of Manhattan and Brooklyn owners regardless of how the legal fight resolves.

What the tax does

The surcharge, approved as part of this year's state budget, applies to non-primary residences valued at $5 million or more for one- to three-family homes, and $1 million or more for condos and co-ops. Through June 2028, condo and co-op owners face rates starting at 4% on the $1M-$3M portion of value, rising to 5.25% between $3M and $5M, and 6.5% above $5M. One- to three-family homes are taxed more modestly: 0.8% between $5M and $15M, 1.05% between $15M and $25M, and 1.3% above that. In 2028, the two rate structures merge into the lower, single-family schedule for everyone.

It's set to appear on tax bills in November. Owners will be able to appeal through March 1 or March 15, depending on property type.

The current legal fight isn't about the tax itself

That's an important distinction. The lawsuit filed against the city, brought by three homeowners represented by attorney Randy Mastro, doesn't challenge the surcharge as a matter of law. It challenges how the Department of Finance identified who owes it.

On July 24, the department published a supplemental tax roll of roughly 900,000 residential properties it described as "related" to the tax. After the list caused confusion, the city clarified that the "vast majority" of those properties wouldn't actually be subject to the surcharge, and that only the roughly 17,000 owners who received a direct letter needed to worry about it. Estimates of how many properties will ultimately qualify range from 5,000 to 13,000. The city hasn't detailed exactly how it arrived at the 17,000 figure, though officials have said letters went out to properties held through trusts or LLCs, and Corporation Counsel Steven Banks said the city drew on tax exemption records, among other sources, to narrow the list.

Mastro's complaint argues the city did too little to verify primary residency on its own, effectively shifting that burden onto homeowners, and that it should have requested personal income tax returns from the state, an option the law specifically allows.

Monday's order, and where it stands today

On Monday, a state Supreme Court justice in Staten Island granted a temporary restraining order barring the city from enforcing the September 18 exemption application deadline and requiring it to take down the published list of potentially affected properties. The city hasn't removed the list. Its position is that filing an appeal of Monday's ruling automatically pauses the order until a higher court weighs in.

As of Friday, the city had received 3,801 exemption applications and continues to process them.

What this means for owners right now

If your property received a letter from the Department of Finance, or you're unsure whether it might be affected, the practical guidance hasn't changed: the city is still processing exemption applications, and the September 18 deadline hasn't formally moved despite the court order. Given the disagreement between the city and the plaintiffs over what the order actually requires, I'd expect more filings from both sides before this settles, and possibly a ruling from the appellate court that clarifies things one way or the other.

I'll keep watching this and will update as it develops. If you've received a letter and want a second set of eyes on your options, or you want to talk through what this means for a specific property, feel free to reach out.