A legal challenge against New York's pied-à-terre tax is expanding as more property owners join a lawsuit seeking to pause the surcharge on luxury second homes. The plaintiffs allege significant issues with the tax's rollout, including alleged errors in official notifications and a complex exemption process.
Four new plaintiffs have joined an existing lawsuit filed by attorney Randy Mastro. The suit aims to halt the tax, which applies to unoccupied, non-primary residences valued at $5 million or more for single- to three-family homes, and $1 million or more for co-ops and condos. Among the new plaintiffs is real estate executive Kenneth Fishel, who claims the Department of Finance mistakenly mailed him a notice about the tax to a neighbor living 27 floors below his Park Avenue co-op. Fishel reportedly only learned of the notice when he encountered the neighbor in an elevator.
The lawsuit asserts that the roughly 17,000 notices sent by the Department of Finance alert property owners of a potential five-figure tax bill unless they file for an exemption. The new plaintiffs, who claim primary residences in Chelsea and the Upper East Side, state they have filed for exemptions but have not yet received them. They argue they are facing difficulties navigating what they describe as a "tangled morass of an exemption regime," despite not being the intended targets of the surcharge.
The plaintiffs contend they will "continue to suffer irreparable harm in attempting to apply for an ‘exemption’ to a tax that was not designed to burden them in any way." The legal action comes after an initial temporary pause on the tax's rollout, granted by a Staten Island judge, was overturned by an appellate court following pushback from the city administration.
Mastro has argued that the inclusion of new plaintiffs would counter the city's claims of mootness, particularly arguments that the suit might become irrelevant if original plaintiffs successfully obtain exemptions. The legal battle continues to highlight concerns over the administration and implementation of the new tax law, which was approved by state lawmakers and Gov. Kathy Hochul in the spring.