New York City Mayor Zohran Mamdani must redo the rollout of his pied-à-terre tax on luxury second homes, a state judge ruled Tuesday, dealing a setback to one of the mayor's key policies.

Judge's Ruling

Justice Wayne Ozzi of Staten Island sided with plaintiffs who argued the city unlawfully placed the burden on homeowners to prove their residency status, when officials should have verified that information themselves. He did not strike down the tax itself, and the city is anticipated to appeal, The Wall Street Journal reported on Tuesday.

"No crime is involved here, but homeowners are being substantially harmed and penalized needlessly by the city's method of implementing the tax law," Ozzi wrote in his decision.

The ruling blocks the city from acting further on roughly 17,000 notices already sent and requires it to take down the online tax roll of about 900,000 properties, though the judge said the city may publish a more limited, targeted list.

A mayoral spokesman said the city plans to appeal, adding, "The ultra-wealthy are fighting in court to avoid paying their fair share." James Whelan, president of the Real Estate Board of New York, called the ruling "an important victory," adding, "The legal challenges are far from over," according to the report.

New Constitutional Challenge

Separately, the report detailed a new lawsuit filed Monday by former Commerce Secretary Wilbur Ross and casino mogul Steve Wynn, who are challenging the tax's constitutionality outright, arguing it discriminates against nonresidents who "cannot vote against lawmakers imposing" it. Ross said the levy would cost him about $83,500 and Wynn roughly $183,000. A separate group of homeowners filed its own complaint alleging the tax is unconstitutional on Tuesday.

New York Gov. Kathy Hochul's spokeswoman, Jennifer Goodman, pushed back, saying Ross and Wynn are "making the case for the pied-à-terre tax as well as anyone could."

Rollout Under Fire for Months

The tax, expected to generate about $500 million for public services, has faced criticism since the city published a searchable database of second-home properties, which drew privacy concerns. The rollout has separately faced scrutiny over homes held through trusts and LLCs, arrangements that can obscure residency status. Critics, including Nassau County Executive Bruce Blakeman and Citadel founder Ken Griffin have argued the tax could push wealthy residents and investment out of the city.

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