---
title: "NYC Pied-à-Terre Tax Lawsuit: What Buyers Need to Know"
description: "REBNY-backed and Wynn-Ross suits, a voided rollout, and the $1M condo line most coverage misstates. What NYC second-home buyers should budget for now."
url: "https://realestaterebatesnewyork.com/guides/nyc-pied-a-terre-tax-lawsuit"
source: "Real Estate Rebate Team"
datePublished: "2026-09-30"
dateModified: "2026-09-30T17:22:20.429Z"
---

# REBNY Backs Lawsuit Against New York's Second-Home Tax: What Buyers Need to Know

NYC Pied-à-Terre Tax · By Régis Roumila · September 30, 2026

Two constitutional challenges were filed this week, and a judge ordered the City to redo its rollout. Where the pied-à-terre tax stands, where its $1 million line really falls on asking prices, and what it means if you are buying an apartment you will not live in full time.

![Looking east across Central Park toward Fifth Avenue, where many of the city's most valuable second homes sit. Photograph courtesy of Ed Yourdon, licensed CC BY-SA 2.0 via Wikimedia Commons.](https://realestaterebatesnewyork-bucket.nyc3.cdn.digitaloceanspaces.com/80fbd6f6-b4ee-42cd-9633-deb0327c6c58.jpg)

*Looking east across Central Park toward Fifth Avenue, where many of the city's most valuable second homes sit. Photograph courtesy of Ed Yourdon, licensed CC BY-SA 2.0 via Wikimedia Commons.*

## What happened this week

On September 29, a group of homeowners and a New York City cooperative corporation sued New York State, asking a court to declare the second-home tax unconstitutional and to stop it being enforced. The Real Estate Board of New York is paying for the case, according to the group, as Inman reported. REBNY President James Whelan said the tax is “affecting New Yorkers it was never intended to reach.”

It was the second suit in two days. On September 28, hotelier Steve Wynn, former commerce secretary Wilbur Ross and his wife, Hilary Geary Ross, filed their own complaint in Suffolk County Supreme Court. The Real Deal notes these are the first two cases to go after the tax itself. Everything filed before them went after the way the City rolled it out.

On that rollout, the City lost a round the same day. State Supreme Court Justice Wayne Ozzi, sitting on Staten Island, ordered the City to cancel the notices it had mailed to about 17,000 property owners and start again, finding the Department of Finance had not worked out who actually owed the surcharge before moving to collect it. The City appealed that evening, which a City official told CNN puts the order on hold while implementation carries on. The plaintiffs' lawyer, Randy Mastro, says he will ask the appellate court to lift that stay.

So, as of today: the tax is law, the City is still administering it, and three separate cases are trying to change that. If you are buying an apartment you will not live in full time, the practical answer has not moved yet. The rest of this piece is about why, and about the one number that decides whether you are in or out.

### How the pied-à-terre tax got to court

1. Proposed: **Governor Hochul proposes the surcharge** (Spring 2026)
   Mayor Mamdani backs it. Officials project about $500 million a year for city services.
2. Enacted: **Passed in the state budget** (May 2026)
   In force from July 1, 2026, with a scheduled sunset on June 30, 2031.
3. Rollout: **DOF publishes its property list and mails notices** (July 2026)
   A list of roughly 900,000 properties goes online and about 17,000 owners are told to claim an exemption or pay.
4. First suit: **Staten Island owners sue over the rollout** (August 2026)
   Justice Ozzi issues a temporary restraining order; the City’s appeal puts it on hold. The tax itself is not challenged.
5. Constitutional suit: **Wynn and the Rosses sue the State** (September 28, 2026)
   Filed in Suffolk County Supreme Court. The argument: the tax falls on nonresidents who cannot vote against it.
6. Constitutional suit: **REBNY-funded suit, and the notices are voided** (September 29, 2026) [Important]
   Homeowners and a co-op sue the State. Hours later Justice Ozzi orders the 17,000 notices cancelled; the City appeals that evening.
7. Exemption deadline: **Last day to file an exemption application** (October 6, 2026) [Deadline]
   Extended from September 18. How the ruling affects it was not clear when this was written.
8. Billing: **Earliest invoices** (From November 15, 2026)
   According to the plaintiffs’ lawyer, the City has told the court it will not invoice before November 15 or collect before January 1, 2027.

**Two of the three cases attack the tax itself, and both were filed in the last week. None of them has stopped the City from issuing bills from mid-November.**

## What the Staten Island ruling does, and what it does not

![Neoclassical Richmond County Courthouse on Richmond Terrace in St. George, Staten Island](https://realestaterebatesnewyork-bucket.nyc3.cdn.digitaloceanspaces.com/0be6f050-7e85-4f4f-b576-cd2fe1a5a5eb.jpg)

*Richmond County Courthouse in St. George, Staten Island. Photograph courtesy of Jim.henderson, released CC0 via Wikimedia Commons.*

Justice Ozzi's order is about process. It requires the City to take down its online list of roughly 900,000 properties, which carried owners' names, and replace it with a list of properties that actually owe the surcharge. It cancels the mailed notices. And it says new ones can only go out after DOF makes an individual determination for each property, using the records it already has, and tells the owner what it relied on (Gothamist, Inman).

It does not touch the tax. The plaintiffs never argued the surcharge was illegal, only that the City had made full-time residents prove they live in their own homes. The City called the decision wrong and appealed it the same evening.

The numbers behind the complaint are worth knowing if you own already. By the City's own count it had approved about 4,700 proofs of residency by September 16, and Mastro says roughly 7,000 of the original 17,000 recipients had been cleared or had filed by August 31. The City also said in August it was sending new notices to more than 11,000 owners based on 2025 state tax data. Whether the October 6 filing deadline still binds was not clear when this was written. If you received a notice and have not responded, file anyway.

### Three lawsuits, two different questions

Only the two September suits ask a court to strike the tax down. The Staten Island case is about how the City decided who owes it.

| Case | Filed | Against | Challenges | Where it stands |
| --- | --- | --- | --- | --- |
| Staten Island homeowners | August 2026, Richmond County | City of New York, DOF | How the rollout identified owners | Won September 29; City appealed, order stayed |
| Wynn, Ross and Geary Ross | September 28, Suffolk County | New York State | The tax itself, as a burden on nonresidents | Just filed |
| Homeowners and a co-op (REBNY-funded) | September 29, 2026 | New York State | The tax itself, on federal and state grounds | Just filed; City says it will intervene |

**A win in Staten Island changes paperwork. Only a win in one of the other two would change what a second-home owner pays.**

*Source: CNN, The Real Deal, Inman and Gothamist reporting, September 29, 2026 — Randy Mastro represents the Staten Island plaintiffs and the REBNY-funded plaintiffs; he does not represent Wynn or the Rosses. Reports differ on the court for the REBNY-funded complaint, so it is left out.*

## The case against the tax itself

![Suffolk County Supreme Court and County Clerk buildings on a street in downtown Riverhead, New York](https://realestaterebatesnewyork-bucket.nyc3.cdn.digitaloceanspaces.com/fd009aca-1e0a-4073-a460-a32faec83dfd.jpg)

*Suffolk County’s Supreme Court and County Clerk offices in Riverhead. The Wynn and Ross complaint was filed in Suffolk County Supreme Court. Photograph courtesy of ComplexRational, licensed CC BY-SA 4.0 via Wikimedia Commons.*

The REBNY-funded complaint throws most of the constitution at the surcharge: the Privileges and Immunities Clause, the Dormant Commerce Clause, due process, equal protection under both the federal and state constitutions, and the Contracts Clause. It adds two state-law arguments, that the tax breaches the state constitution's limits on real estate tax revenue and that it skipped the home rule process required for a law aimed at a single city.

The plaintiffs are more interesting than the clauses. Two couples live in Florida and own on the Upper East and Upper West Sides. One owns a co-op at 730 Park Avenue and lives in Quogue. Others own a Little Italy co-op and live upstate, and one bought at 876 Park Avenue in April intending to move in after a renovation (The Real Deal). The complaint says the surcharge adds $45,000 to $89,000 a year to their bills, doubling or quadrupling some of them. Mastro also described a City resident who bought from an estate in February and owes the surcharge anyway, because the law looks at who owned the apartment on January 5.

The Wynn and Ross complaint is narrower. All three live in Florida, and they argue a tax that lands only on people who cannot vote in New York is discriminatory by design. Per the filing, as reported by Forbes, DOF billed Wynn $183,094.69 on a Manhattan condominium and the Rosses $83,531.52 on their co-op.

The City is not sitting this out. It says it will intervene to defend the tax. A complaint is an argument, not a ruling, and cases like these usually take many months to decide.

## What the tax is, and the number most coverage gets wrong

The surcharge is an annual charge on New York City homes that are not anyone's qualifying primary residence. It runs from July 1, 2026 to June 30, 2031, and it is added to the property tax bill.

You will read that it applies to homes “over $5 million” and to co-ops from $1 million. That is half right. The Department of Finance rate table puts condominium units and co-op units in the same schedule, starting at $1 million. The $5 million threshold belongs to one-, two- and three-family houses, plus a small group of low-rise condos that sit in Tax Class 1. We made the same point when the rollout began, in our August guide to the deadline, and this week's coverage is still mixed on it.

The second thing that gets lost is what “valued” means. The test is DOF market value, not the price you pay. For condos and co-ops, DOF sets that value by comparing the building to rental buildings, and it usually comes out far below a sale price. Co-op apartments have no value of their own on the roll, so DOF imputes one from the building's value and the apartment's share of it, without publishing the arithmetic.

Once a home is over the line, the rate applies to the whole value, not the excess. Condos and co-ops pay 4 percent from $1 million, 5.25 percent from $3 million and 6.5 percent from $5 million. Houses pay 0.8, 1.05 and 1.3 percent from $5, $15 and $25 million. From July 2028 every covered type moves to the $5 million threshold and the house rates, with condos and co-ops revalued on comparable sales under a method DOF has not yet published. The full schedule and a calculator are in our second-home tax guide.

### Does the surcharge reach the home you are buying?

How will the home be used on January 5 each year?

- **It will be my primary residence** — Or the primary residence of a spouse, parent, child, sibling, grandparent or grandchild.
  Likely outside the surcharge (Potential exemption): Status is fixed each January 5 and you can have only one primary residence. Keep the records that prove it.
  [Check the exemption rules](https://realestaterebatesnewyork.com/guides/nyc-second-home-tax)
- **I will lease it to a tenant** — An arm’s-length lease of at least a year, to someone who lives there as their primary home.
  Likely outside it, from the next January 5 (Potential exemption): Tax advisers say short-term rentals probably do not qualify. A lease signed after January 5 does not help the current year.
  [Check the exemption rules](https://realestaterebatesnewyork.com/guides/nyc-second-home-tax)
- **A condo or co-op I will not live in** — Tax Class 2 condominium units and co-op apartments, which is almost every Manhattan apartment.
  Exposed from $1 million of DOF market value (Potential exposure): 4% of the whole DOF value from $1M, 5.25% from $3M, 6.5% from $5M. Some reports still say $5M for condos; the DOF table says $1M.
  [Estimate the surcharge](https://realestaterebatesnewyork.com/calculators/nyc-second-home-tax-calculator)
- **A one-to-three family house I will not live in** — Tax Class 1 homes, and the small number of condos that sit in Tax Class 1.
  Exposed from $5 million of DOF market value (Potential exposure): 0.8% from $5M, 1.05% from $15M, 1.3% from $25M. A two- or three-family house is exempt if one unit is a qualifying primary residence.
  [Estimate the surcharge](https://realestaterebatesnewyork.com/calculators/nyc-second-home-tax-calculator)

**Use decides whether you are covered. DOF market value, not the purchase price, decides whether you pay and how much.**

### Where the $1 million line actually falls on asking prices

Every active condominium listing on our books that we could match to its 2026/27 DOF unit value, grouped by asking price. The surcharge line is $1 million of DOF value, and it starts to bite well above $1 million of price.

| Asking price | Condos | Over $1M DOF | Share | Median DOF value |
| --- | --- | --- | --- | --- |
| Under $3M | 1,993 | 4 | 0.2% | $299,397 |
| $3M to $4M | 209 | 18 | 8.6% | $705,392 |
| $4M to $5M | 91 | 22 | 24.2% | $773,223 |
| $5M to $7.5M | 151 | 96 | 63.6% | $1,093,195 |
| $7.5M to $10M | 76 | 59 | 77.6% | $1,365,764 |
| $10M and up | 131 | 128 | 97.7% | $1,866,166 |

**327 of 2,651 condos, 12.3 percent, are over the line. It sits somewhere around a $5 million asking price, but 44 condos asking less than that are caught and 75 asking more are not.**

*Source: Real Estate Rebate Team analysis of REBNY RLS listings and NYC Department of Finance unit market values — Active for-sale listings with mls_type Condominium, deduplicated by building and unit, matched to the DOF 2026/27 unit market value in Tax Class 2 (2,651 of 4,083 unique units matched). One listing whose matched value was 20 times its asking price was excluded as a mismatch. Co-ops are not included: DOF does not publish a per-apartment value for them. Unsold sponsor units are excluded from the surcharge while the sponsor holds them, but are counted here because the buyer takes on the unit’s value.*

## What that costs, run through our calculator

Across those 2,651 apartments, the typical condo's DOF value is about a quarter of its asking price. The median ratio of ask to DOF value is 4.4, and the middle half runs from 3.5 to 5.6. That spread is why a single price cutoff does not work. Two apartments asking the same $4.5 million can sit on opposite sides of the line.

Run the medians through our second-home tax calculator and the bill looks like this for an owner who does not qualify for an exemption. A condo at the $5 million to $7.5 million median, $1,093,195 of DOF value, owes $43,728 a year. At the $7.5 million to $10 million median it is $54,631. At the $10 million-plus median it is $74,647.

The threshold is a cliff, not a ramp. A condo valued by DOF at $999,999 owes nothing. At $1,000,000 it owes $40,000, because the 4 percent applies to the whole value. If you are looking at an apartment that sits just under the line, next year's assessment matters a great deal.

Geography matters too. 318 of the 2,096 matched Manhattan condos are over the line, 15.2 percent. In Brooklyn it is 9 of 402, and in Queens none of 153. We cannot give the same figure for co-ops, because DOF imputes their values privately. The Rosses' $83,531.52 bill is a reminder that co-ops are very much in scope.

Source: Real Estate Rebate Team analysis of active REBNY RLS condominium listings matched to NYC Department of Finance 2026/27 unit market values, September 30, 2026. Surcharge amounts from our calculator, which applies the DOF rate table.

## Buying a co-op or buying mid-year: you can inherit someone else’s bill

![Prewar brick co-operative apartment building at Park Avenue and East 79th Street with taxis on the avenue](https://realestaterebatesnewyork-bucket.nyc3.cdn.digitaloceanspaces.com/02d3f28b-f6a9-47ec-a21a-8fc04569610e.jpg)

*A co-operative at 898 Park Avenue, at East 79th Street. Photograph courtesy of Jim.henderson, licensed CC BY 4.0 via Wikimedia Commons.*

Two details in this week's filings matter more to a buyer than the constitutional arguments.

The first is the January 5 taxable status date. Whether a home owes for the tax year is decided by who owned it and how it was used on that day, with no proration. If the seller did not live there on January 5, the apartment can owe the surcharge for the whole year after you buy it, even if you move in the week you close. That is exactly the estate buyer in the REBNY complaint.

Lawyers are already writing around it. Andrew Freedland of Herrick told Inman he drafts clauses that split the surcharge between buyer and seller by the days each owns the unit in the July-to-June tax year, settled by a credit or a check at closing.

The second is co-ops. The complaint argues a co-op corporation could end up liable for a surcharge tied to one shareholder, and Freedland says boards have asked whether to amend proprietary leases or hold escrows from sellers whose units may owe it. If you are buying into a co-op, ask the managing agent whether the board has adopted either. It changes what you close with and what the seller walks away with. You can browse Manhattan co-ops for sale and Manhattan condos for sale on our site.

## What this means if you are buying now

- Budget for it until a court says otherwise. A lawsuit is not a ruling, and the City's appeal keeps implementation running. If the apartment will not be your primary residence, carry the surcharge as a real cost for at least the coming year.

- Get the DOF market value, not the asking price. It is on the Notice of Property Value and in the City's property records. Our table shows the line can fall anywhere from about $3 million to past $7.5 million of price.

- Ask how the seller used the home on January 5, and write the answer into the contract. If the answer is anything other than “as my primary residence”, negotiate a per-diem split or an escrow before you sign.

- Buying new development? Check which exclusion the unit is relying on. The law excludes a building whose required certificate of occupancy, temporary or permanent, has not yet been issued, and unsold units still held by the sponsor that filed the offering plan. A TCO ends the first exclusion, but units the original sponsor still holds stay outside the surcharge until they sell. Both are judged on January 5, so your exposure generally starts with the first January 5 after you close. DOF has declined to extend the sponsor exclusion to successor sponsors, bulk buyers of unsold inventory or projects sold under an Attorney General no-action letter, so if the building has changed hands, ask who holds the unsold units.

- Ask for any notice DOF sent, and what happened to it. The notices are being cancelled and reissued, so an old letter is a starting point, not an answer.

- Confirm your own status early. Your own primary residence, a close family member's, or a lease of a year or more are the routes out. If your situation is close to the line, that is a conversation with your attorney and your CPA before the contract, not after.

## Market read by Régis Roumila

In new development above $5 million, buyers from out of state and abroad have long been a big share of sponsor sales. A recurring surcharge of roughly $44,000 to $75,000 a year changes their math, and sponsors know it. I expect more room to negotiate on units aimed at that buyer.

What I would not do is assume anything under $5 million is safe for a condo. The line is the City's value, not the price, and in our own inventory it lands anywhere from about $3 million to past $7.5 million of asking price. Get the number before you get attached to the apartment.

If you will live in the apartment, this is a moment where being a primary resident is worth something at the table. And whatever you buy, remember where the money is. The commission is the seller's to offer. Whatever it turns out to be, we share half of it. At 3 percent on a $6 million purchase that is $90,000, about two years of surcharge at the median for that price band. Talk to me before you assume the sponsor's price is the price.

## Sources and methodology

This article was written by Régis Roumila, a licensed real estate broker in New York and New Jersey and the founder of Real Estate Rebate Team, with more than 25 years in the New York City market.

Case facts were checked on September 30, 2026 against CNN, The Real Deal, Inman, Gothamist and Forbes. Where they differed, we used the later or more specific account: CNN reports the City appealed the Staten Island order on September 29 and that the appeal stays it, which supersedes earlier reports that the City would seek a stay. The $45,000 to $89,000 figure comes from the REBNY-funded complaint as reported by The Real Deal, not from the Wynn and Ross filing. Thresholds and rates come from the Department of Finance rate table, which puts condominium and co-op units at $1 million; several outlets describe the $1 million tier as co-ops only. The inventory analysis matches active REBNY RLS condominium listings to DOF 2026/27 unit market values, and surcharge amounts come from our calculator, which applies the DOF schedule to the whole DOF value.

Primary sources

- NYC Department of Finance: non-primary residence surcharge, rate table and eligibility

- NYC Department of Finance: Notice of Adoption of Final Rules, 19 RCNY chapter 62 (sponsor exclusion, taxable status date)

- NYC Department of Finance: surcharge exemption eligibility tool

- NYC Tax Commission: surcharge appeals

- REBNY: Second-Home Annual Tax resources

Coverage cited for context

- CNN, September 29, 2026: New York judge orders city to scrap pied-à-terre tax rollout

- The Real Deal, September 29, 2026: New York faces fresh challenges to pied-à-terre tax

- Inman, September 29, 2026: Judge orders NYC to redo pied-à-terre rollout as tax faces new suits

- Gothamist, September 29, 2026: Mamdani must redo his pied-à-terre tax rollout, NY judge orders

- Forbes, September 29, 2026: Judge orders NYC to redo pied-a-terre tax rollout

Photography

- Central Park toward Fifth Avenue: Ed Yourdon, Wikimedia Commons, CC BY-SA 2.0

- Richmond County Courthouse: Jim.henderson, Wikimedia Commons, CC0

- Suffolk County Supreme Court, Riverhead: ComplexRational, Wikimedia Commons, CC BY-SA 4.0

- 898 Park Avenue: Jim.henderson, Wikimedia Commons, CC BY 4.0

Related on this site

- NYC Second-Home Tax 2026: rates, exemptions and calculator

- The pied-à-terre tax deadline, and the threshold most coverage got wrong

- NYC second-home tax calculator

Questions about a specific apartment? Contact Régis.

This article is general information as of September 30, 2026, not legal, tax or mortgage advice. Thresholds, exemptions and deadlines are set by the State and the New York City Department of Finance and may change as the litigation proceeds. Consult your attorney and your CPA about your situation.

## Frequently Asked Questions

### Has the NYC pied-à-terre tax been passed?

Yes. State lawmakers passed it in May 2026 as part of the state budget, and it applies from July 1, 2026 until June 30, 2031. Three lawsuits are pending as of September 30, 2026, two of them asking a court to strike the tax down, but no court has done so and the City is still administering it.

### Who has to pay the pied-à-terre tax?

Owners of New York City condos and co-ops with a Department of Finance market value of $1 million or more, and of one- to three-family houses valued at $5 million or more, when the home is not a qualifying primary residence on January 5. The test is DOF market value, not the sale price, and for condos it usually crosses $1 million somewhere around a $5 million asking price.

### How much is the pied-à-terre tax?

For condos and co-ops it is 4 percent of the whole DOF market value from $1 million, 5.25 percent from $3 million and 6.5 percent from $5 million. For houses it is 0.8, 1.05 and 1.3 percent from $5, $15 and $25 million. In our active listings, a condo at the median DOF value for the $5 million to $7.5 million price band would owe about $43,728 a year.

### How can I avoid the NYC pied-à-terre tax?

Only through the exemptions in the law: the home is your primary residence, or the primary residence of a close family member, or it is leased at arm’s length for at least a year to someone who lives there. Status is fixed on January 5 and short-term rentals probably do not qualify. Talk to your attorney and CPA before you buy if your situation is close to the line.

### Does the Staten Island ruling mean I will not have to pay?

No. The ruling cancels about 17,000 notices and makes the City redo how it decides who owes the surcharge. It does not touch the tax itself, and the City appealed the same day, which keeps implementation going. According to the plaintiffs’ lawyer, the City has told the court it will not invoice before November 15 or collect before January 1, 2027.

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