New York City’s plan to generate more than $500 million annually from a new tax on luxury second homes is facing growing uncertainty, with thousands of property owners already receiving exemptions and multiple lawsuits challenging the policy.

Mayor Zohran Mamdani and Gov. Kathy Hochul announced the levy targeting high-value properties used as secondary residences, including co-ops valued above $1 million and houses worth more than $5 million.

According to the city Department of Finance, approximately 10,000 exemption applications had been submitted as of Friday morning, with 5,700 approved. Additional requests and appeals are continuing to come in, raising questions about how much revenue the measure will ultimately produce.

Ben Williams, an attorney representing plaintiffs challenging the tax, questioned whether the city’s original revenue forecast was realistic. He noted that exemptions for primary residences, along with disputes over property valuations, could substantially reduce the amount collected.

The rollout has also encountered legal obstacles. The deadline to seek exemptions has been postponed repeatedly and was most recently extended from October 6 to October 13 following a lawsuit brought by Randy Mastro, a former deputy mayor under Eric Adams.

In the case, Staten Island Justice Wayne Ozzi ruled that the city must restart the implementation process after notifying approximately 17,000 potentially affected homeowners prematurely. The city now estimates that between 10,000 and 13,000 properties could be subject to the tax.

The Mamdani administration appealed the ruling and obtained a stay, allowing the tax process to move forward while the legal dispute continues. Real-estate attorney Joshua Wurtzel warned that if the court’s ruling ultimately stands, it could jeopardize the entire program.

Two additional lawsuits challenging the measure on the grounds that it discriminates against out-of-state property owners are also pending in Long Island court.

Despite the mounting legal challenges and exemption approvals, the Department of Finance continues to stand by its projection of more than $500 million in annual revenue. City officials argue that owners of luxury second homes should contribute more toward funding public services, including education and public safety.

The department has dismissed the lawsuits as without merit and says it intends to enforce the tax in a fair, efficient and lawful manner. Property owners seeking exemptions have until October 13 under the latest extension.