New York City’s luxury second-home tax advances after court ruling

The tax, which applies to properties valued over $5 million, was initially challenged in September by a group of New York City homeowners. A Staten Island judge had sided with the homeowners, citing confusion and privacy concerns related to the tax’s rollout. The city immediately appealed that decision.

The appellate court’s Wednesday ruling found that the homeowners lacked the legal standing to challenge the tax, stating they failed to demonstrate actual harm. The court dismissed their concerns about the time and expense of proving primary residency as speculative and typical of tax filing processes.

“This court prevented the attempt of the ultrawealthy to avoid paying their fair share,” said Mayor Zohran Mamdani in a statement. He added that the revenue generated will fund public services.

Randy Mastro, representing the homeowners, criticized the court’s decision, calling it “unconscionable” and arguing that it forces individuals to prove their residency to avoid the tax. He expressed confidence that a separate lawsuit, filed in September by Florida residents and individuals including businessman Steve Wynn and former Commerce Secretary Wilbur Ross, will ultimately invalidate the surcharge.

That lawsuit, which challenges the tax’s constitutionality, is scheduled for arguments in December.