A Staten Island judge halted New York City’s new tax on luxury second homes on Monday, ordering the city to take down a public list naming roughly 900,000 property owners and barring officials from acting on the 17,000 tax notices already in the mail until at least the end of the month.

The ruling from Richmond County Supreme Court Justice Wayne Ozzi does not strike down the surcharge itself. It stops the city from running it. Until a hearing on Aug. 31, the Department of Finance cannot grant exemptions, cannot rule that any owner owes the tax, and cannot issue new notices. The supplemental market value roll posted on the agency’s website has to come off.

The tax was enacted as part of the state budget and signed into law in May, aimed at closing roughly $500 million of the city’s deficit. It applies to one- to three-family homes assessed at $5 million or more, and to condominiums and co-ops valued at $1 million or more, in each case only where the property is not the owner’s primary residence.

The trouble started with how the city identified who owed it. Rather than determine property by property which homes were actually second residences, the Department of Finance published a roll listing names, addresses and property values for about 900,000 residential properties, then mailed notices to some 17,000 owners telling them they would be assessed unless they applied for an exemption by Sept. 18. Owners who had lived in their homes for decades found themselves on a public list and holding a letter demanding they prove a negative.

Ozzi found that approach unlawful. He ruled the mailed notices did not amount to proper notice under tax law and wrote that no statute permitted or required the city to publish a list of that scale, or to release it through an off-cycle mid-year publication. The city, he said, owed each owner an individualized determination before shifting the burden onto the homeowner.

Three homeowners brought the suit last Friday: Simon Hedley of Chelsea, along with Rachel O’Brien and Carmine Morano, the wife and father of Staten Island City Councilman Frank Morano. All three said their properties are primary residences. They are represented by Randy Mastro, first deputy mayor under Eric Adams, who called the ruling a vindication for hundreds of thousands of owners swept into a process they should never have been in.

The complaint does not attack the surcharge’s legality. It argues the city ignored state records made available under the law precisely so officials could identify eligible properties in advance, and instead ran a dragnet.

City Hall said it will appeal immediately, and expects the appeal to stay the order. A spokesman for the mayor, Matt Rauschenbach, said the administration remains confident in the surcharge and in the city’s ability to administer it fairly, describing it as asking owners of $5 million second homes to pay their share.

In court, the city warned that a freeze would strand homeowners already in the queue. It told the judge the finance department had received 3,801 challenges to its primary residence determinations, and argued that pausing the Sept. 18 deadline could leave appeals unprocessed before bills go out on Nov. 15. Filings also showed that Hedley’s own exemption was approved on Saturday, a day after he sued, once he uploaded a tax return.

Gov. Kathy Hochul, who announced the proposal alongside Mamdani in April and signed it into law, put distance between Albany and the rollout hours before the ruling. Speaking in the Bronx, she said the state is not responsible for the implementation, that the city was consulted in advance, and that City Hall should streamline the process. It was a shift from her earlier framing of the measure as a way to make wealthy foreign owners of empty apartments contribute.

The pause carries real weight for the residential market. Brokers had reported second-home buyers pulling back while the tax picture stayed unsettled, and co-op and condo boards had begun fielding questions from shareholders who appeared on the published roll. The list coming down removes an immediate exposure for owners whose names, addresses and property values were searchable by anyone.

For the city’s finances, the timing matters more than the legal question. The surcharge was written into the budget as a revenue line for the current fiscal year, and the collection calendar runs through the November billing cycle. Every week the rollout stays frozen compresses the window to process exemptions and issue accurate bills.

Both sides return to court on Aug. 31. Until then, the tax exists on the books and cannot be collected.

JBizNews Desk | New York

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