New York Appeals Court Clears Path for Mamdani’s Luxury Property Surcharge to Move Forward

A New York appellate court on Thursday removed a legal impediment that had halted New York City Mayor Zohran Mamdani’s contested surcharge on high-value residential properties, clearing the way for the administration to resume implementation while litigation continues. Judge Philip Hom’s decision to temporarily lift the earlier restraining order enables the city to proceed with the tax as the case moves through the appeals process.

Randy Mastro, representing homeowners challenging the surcharge’s rollout, denounced the city’s approach in remarks to Fox News Digital, asserting that the administration refuses to acknowledge implementation failures. Mastro characterized thousands of surcharge notices sent to property owners as “blatantly illegal” and accused the mayor of prioritizing his agenda over lawful procedures that would require the city to verify primary residence status before imposing obligations on homeowners.

Homeowners Rachel O’Brien, Carmine Morano and Simon Hedley filed the lawsuit challenging not the surcharge itself but rather the city’s execution of the program. They argue the administration improperly shifted the burden to property owners to prove they reside in their homes, rather than conducting initial determinations independently, and claim the publication of a supplemental property roll containing data on over 900,000 homeowners created widespread confusion and unwanted scrutiny.

The city’s legal team contended that filing a notice of appeal automatically triggered a stay under state law and argued that the lower court’s order disrupted the administrative timeline for the Department of Finance. City officials emphasized that inclusion on the supplemental roll does not automatically subject a property to the surcharge and that the administrative appeals process provides homeowners a clear mechanism to establish primary residence status.

Judge Wayne Ozzi had sided with the homeowners on Monday, determining that the surcharge notices caused irreparable harm and that the city bore responsibility for making individualized determinations before issuing them. Ozzi also found the homeowners demonstrated a likelihood of success on the merits, though he stressed he was making no final ruling on the case’s ultimate outcome.

The city projects the surcharge will generate at least $500 million through fiscal year 2028, according to appellate filings, and has warned that delays could interfere with property tax bills scheduled to mail November 15. Mamdani’s administration maintains the tax represents a fair contribution from owners of second homes valued at $5 million or more who benefit from city services including schools and public safety.

The homeowners are scheduled to return to court August 31 to seek permanent relief. The appellate case, with the City of New York, Mayor Mamdani, the Department of Finance and Finance Commissioner Richard Lee as parties, is proceeding on an expedited basis, but Thursday’s order does not determine which side will ultimately prevail.