A New York appeals court reversed a lower court ruling that required the city to redo the rollout of Mayor Zohran Mamdani's tax on second homes, finding that the homeowners who challenged it "lack standing."
The Appellate Division of the Supreme Court of the State of New York, Second Judicial Department, issued its decision and order on Wednesday after arguments on Oct. 28. All four justices on the panel concurred, reversing a Sept. 29 judgment from Richmond County, denying the amended petition and dismissing the case.
Court Finds Homeowners Lack Standing
The state Legislature created the surcharge in May for covered properties that are not primary residences, the ruling noted. Covered properties include one-, two- and three-family homes, co-ops and condos. From July 2026 to July 2028, the market value thresholds are $5 million for class one properties and $1 million for co-op and condo units.
The petitioners challenged the Department of Finance's publication of a roll of property market values and its July notices to about 17,000 owners. The court said standing requires an "injury-in-fact," meaning concrete harm. It found that receiving a notice "serves an informational purpose" and is not an injury.
The petitioners also said the published roll caused "mass confusion." The court said confusion is "too generalized, tenuous, and ephemeral" to confer standing.
Mamdani Cheers Ruling
The ruling lets the administration proceed with collecting the tax and is Mamdani's first major legal victory over a core piece of his agenda, The New York Times reported. Mamdani said in a statement on Wednesday that he was "heartened" and that the wealthy have used "every legal avenue available" to shield their wealth, according to the report.
The Mayor's Office did not immediately respond to MarketDash's request for comment.
Earlier Rulings and Pending Suits
The decision overturns a ruling in which Justice Wayne Ozzi had found the city unlawfully put the burden on homeowners to prove residency. That ruling had blocked action on the notices and required the city to take down an online roll of about 900,000 properties. He did not strike down the tax itself.
The tax, expected to generate about $500 million for public services, still faces challenges. Former Commerce Secretary Wilbur Ross and casino mogul Steve Wynn had sued, arguing it unconstitutionally discriminates against nonresidents.
Despite the appellate court's ruling, two separate pending lawsuits argue that the law breaks state constitutional limits on how much the city can collect in real estate taxes, the New York Times reported.
