NYC Pied-a-Terre Tax Ruling: Notices Canceled, 2 Suits Filed

On September 29, 2026, a Staten Island judge ordered New York City to cancel about 17,000 pied-a-terre tax notices, and two lawsuits filed that same week ask courts to strike down the tax itself. The ruling is about how the Department of Finance sent the notices, not about whether the surcharge is legal, and the city says its appeal has already put the order on hold. If you own, are buying, or are selling an apartment the city values above $1,000,000, here is what is settled, what is still open, and what I would do in the next seven days.

I run the surcharge math on every second-home purchase I price, and the ruling does not change that math by a dollar. What it changes is who has to prove what, and it puts three court cases behind every purchase of a non-primary residence. For the rates, thresholds and exemption list, start with my guide to the notices and the October 6 deadline. This page covers what the court did.

What the judge ordered

Justice Wayne Ozzi of State Supreme Court in Staten Island ruled for a group of homeowners, represented by former First Deputy Mayor Randy Mastro, who received notices even though the properties were their homes. The court found that the Department of Finance had the tax data to work out who was a full-time resident and did not use it, which, in the judge's words, "unfairly shifted the burden to thousands of homeowners to prove their basic residency."

The order tells the city to do three things:

• Cancel the roughly 17,000 notices already mailed.
• Take down its online roll of nearly 1 million properties and replace it with a list of properties it has actually determined to be subject to the surcharge.
• Make an individual determination for each property, using the information it already holds, before sending any new notice, and say in the notice how it reached that conclusion.

The numbers behind the ruling show why it landed. The Department of Finance mailed about 17,000 notices in July. It later determined that nearly 6,000 of them, about 35%, went to primary residences that are not subject to the surcharge, according to The City Reporter. The city has said it expects the surcharge to raise about $500 million a year.

Is the order in effect? The city and the plaintiffs disagree

The city appealed and says the appeal automatically puts the judge's order on hold. The mayor's office said the decision is wrong and that it will continue implementing the surcharge. The plaintiffs' side reads it differently. REBNY told members that the plaintiffs maintain the order stays in effect unless the city gets a stay from the Appellate Division.

That disagreement decides what happens to the October 6 exemption deadline, which the Department of Finance set on August 26 for owners who received a notice:

Press reports on September 29 said it was not clear how the ruling affects the deadline. Until the Department of Finance says in writing that it no longer applies, I tell anyone holding a notice to treat October 6 as live. An exemption application costs nothing, and it protects you whichever side wins the stay question. If you are not sure, ask your attorney or CPA before October 6, not after.

Three lawsuits, three different questions

The Staten Island case is one of three, and the other two go further. They ask whether the tax is constitutional, which is a different question from whether the city mailed the notices correctly.

The REBNY-supported complaint raises claims under the U.S. and New York constitutions. They include that the tax discriminates against nonresidents, applies retroactively, and burdens cooperative buildings, because a co-op can be held liable for a surcharge tied to one shareholder's unit. Plaintiffs in that case include buyers and sellers caught by the law's January 5, 2026 taxable-status date. REBNY President James Whelan has said the tax is reaching New Yorkers it was never meant to reach.

The distinction matters for planning. A win on the rollout only forces the city to start over, and the surcharge comes back with better paperwork. A win in either Suffolk case could change or end the tax. I am reporting where each side stands, not picking one. Neither Suffolk case has been heard yet, so nobody can tell you how they come out.

NYC Condos $1M and Up

Manhattan and Brooklyn condos in the price range the surcharge reaches

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Active

$1,650,000

305 2nd Avenue #312

Gramercy Park

1 bd 2 ba 1,206 sf

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Condo · 1903 RLS #RLS20103209

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$3,695,000

240 Park Avenue S #14B

Flatiron

3 bd 4 ba 2,140 sf

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Condo · 2007 RLS #RLS20105828

Listing information provided courtesy of the Real Estate Board of New York's Residential Listing Service (RLS). Information is deemed reliable but not guaranteed. Sale listings verified. ©2026 REBNY. RLS data displayed by Keller Williams NYC.

What stays the same while the cases play out

• The surcharge is still law. The state enacted it in May 2026 as Tax Law Article 30-C.
• The rate applies to the full Department of Finance valuation, not the amount over the threshold. A condo the city values at $1,000,000 carries about $40,000 a year.
• Residency is measured as of January 5, so an owner who moves a second home into the rental market afterward does not escape the current year, according to attorney commentary in Inman.

For the one-time cost that sits next to it at closing, use the mansion tax calculator and my mansion tax guide. The surcharge is a separate annual line.

Buyers and sellers: what lawyers are writing into contracts

Attorneys told Inman that the tax is already changing how deals are papered. Andrew Freedland, co-chair of the co-op and condo practice at Herrick, said he has written contract provisions that split the surcharge between buyer and seller by the number of days each owns the unit during the July-to-June tax year, settled with a check or a credit at closing.

He also said co-op boards have asked whether to amend proprietary leases or hold escrows from sellers whose units may owe the surcharge, since the city can pursue the tax for years after a sale. On rentals, he said an owner who moves a unit into the rental market does not avoid the current year, though a qualifying lease can exempt the unit going forward. Mark Limardo, a Herrick tax partner, said short-term rentals likely will not qualify, because the exemption requires a one-year lease at fair market rent.

That is attorney commentary on how deals are being structured, not settled law, and your own lawyer should decide what goes in your contract. My advice on the brokerage side is simple. Treat the surcharge as a real annual cost next to common charges and property tax, and ask your attorney to address who pays it, and how it is prorated, before you sign.

What to do this week

Three things I am watching: whether the Appellate Division rules on a stay, whether the two Suffolk County cases are assigned to the same judge, and what the Department of Finance publishes on or before October 6. For buyers weighing a second home across Manhattan and the other boroughs, my pied-a-terre buying guide covers which buildings allow part-time owners at all.

This is general information, not legal or tax advice. Litigation is moving daily and some details may change after October 1, 2026. Confirm your own filing with a New York real estate attorney or your CPA.

Sources

Facts on this page were checked against these sources on October 1, 2026.

• Inman, September 29, 2026, the ruling, the two new suits, and the attorney commentary on contracts
• Fortune, September 29, 2026, the claims, the mayor's office response, and the Ross and Wynn suit
• NY1, September 29, 2026, the judge's findings on the burden of proof
• The City Reporter, September 29, 2026, the share of notices sent to primary residences and the revenue estimate
• The Hill, September 29, 2026, the due process holding
• NYC Department of Finance, non-primary residence surcharge, the filing rules and the October 6 deadline
• REBNY member updates, week of September 28, 2026, the stay dispute and the REBNY-supported complaint