Mamdani’s luxury-home tax gets new life as appeals court lifts roadblock in homeowner fight

Democratic New York City Mayor Zohran Mamdani’s controversial luxury-home tax rollout is back on track, at least for now, after a New York appeals court on Thursday lifted the roadblock that had stopped the city from moving ahead.

Judge Philip Hom temporarily lifted the order blocking the city from moving ahead with the rollout, allowing the surcharge process to resume while the legal battle continues.

Randy Mastro, the attorney representing the homeowners challenging the rollout, blasted the administration in a statement to Fox News Digital.

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“It is a shame that the City can’t own up to its own mistakes and admit that it has badly botched the rollout of this surcharge,” Mastro said. “Instead, the administration is doubling down, going to court to ensure that it can continue harassing and threatening New York City homeowners who clearly are permanent residents — something the City would know if it would only do its homework.”

Mastro accused Mamdani of pushing ahead with thousands of surcharge notices he called “blatantly illegal.”

“It is, quite frankly, outrageous that this Mayor is so desperate to further his agenda that he’s continuing to try to enforce thousands [of] surcharge ‘notices’ that are blatantly illegal,” Mastro said.

“We remain confident that when we are back in court in a mere 18 days, the thousands of New York City homeowners who are now illegally burdened with the responsibility of proving they do indeed live in their own homes will finally get the permanent relief they deserve,” he added.

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Mastro’s office also confirmed to Fox News Digital on background that Thursday’s development was procedural, allowing the city to move forward with its appeal while staying the temporary restraining order.

The homeowners are expected back in court Aug. 31, when they will seek permanent relief from the original judge.

The appellate order came after a sharp dispute over whether the city’s decision to appeal had automatically put Judge Wayne Ozzi’s entire order on hold.

In an Aug. 11 letter to Ozzi, Mastro argued that most of the judge’s restrictions remained in effect and warned the city against pressing ahead with the surcharge.

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Thursday’s order removed that immediate uncertainty by staying Ozzi’s temporary restraining order while the city’s appeal moves forward.

The latest turn comes just three days after Ozzi slammed the brakes on the city’s rollout of the surcharge, which targets certain high-value properties that do not serve as primary residences.

Ozzi ordered the city to remove a disputed supplemental property roll from its website and temporarily blocked officials from taking further action based on the roll or notices sent to homeowners.

He also stopped the city from enforcing deadlines contained in those notices, including the Sept. 18 deadline to file an administrative appeal.

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The lawsuit was filed by New York City homeowners Rachel O’Brien, Carmine Morano and Simon Hedley, who are not challenging the surcharge itself but rather how the Mamdani administration implemented it.

The homeowners argue the city improperly put the burden on New Yorkers to prove they live in their properties rather than first determining which homes actually qualify for the surcharge.

Their lawsuit also takes aim at the city’s publication of a supplemental property roll containing information on more than 900,000 homeowners. The plaintiffs allege the publication caused “mass confusion” and subjected homeowners to unwanted public scrutiny.

During Monday’s hearing, Mastro repeatedly accused the administration of failing to do its homework before launching the program.

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“The city screwed this up… got it wrong… stop the train and make them do it over,” Mastro told the court.

“The city is to bear the burden,” he argued. “They didn’t do their homework.”

The city quickly fought back.

In appellate papers filed Thursday, the city asked the court to confirm that Ozzi’s entire temporary restraining order was automatically stayed under state law or, alternatively, grant a stay while its appeal proceeds. The city also sought permission to appeal if necessary.

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City attorneys argued that filing a notice of appeal and an affirmation of its intention to seek permission to appeal triggered an automatic stay.

The city also argued that Ozzi’s order disrupted the status quo and threatened to derail the Department of Finance’s implementation of the surcharge under an already tight timeline.

According to the city’s filing, the Department of Finance sent initial determination notices to approximately 17,000 property owners. City officials have maintained that inclusion on the much broader supplemental roll did not mean a property owner would ultimately be subject to the surcharge.

The city warned that leaving the lower court’s order in place could interfere with property tax bills scheduled to be mailed Nov. 15 and potentially jeopardize revenue from the surcharge. The city comptroller has projected the tax will generate at least $500 million through fiscal year 2028, according to the appellate filing.

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The city has also argued that the administrative appeals process gives homeowners a straightforward way to establish that a property is a primary residence and that officials may not have access to all of the information necessary to make that determination without additional documentation from owners.

The homeowners dispute that argument, saying state law required the city to make an individualized initial determination before sending the notices in the first place.

One plaintiff, Hedley, ultimately received approval after submitting documentation showing that his property was his primary residence. Mastro has argued that Hedley’s experience demonstrates how easily the city could have made the determination itself before sending the notice.

Monday’s courtroom battle grew heated as the two sides clashed over whether the rollout harmed homeowners and whether stopping the process would instead hurt taxpayers and the city.

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Ozzi ultimately sided with the homeowners at the preliminary stage, finding that the notices caused irreparable harm and that the burden was on the city to make an initial determination. He also found the homeowners had demonstrated a likelihood of success on the merits, while emphasizing that he was not making a final determination in the case.

Mamdani’s administration immediately vowed to fight the ruling.

“We disagree with today’s ruling, but we are confident in both the pied-à-terre surcharge and the City’s ability to implement it fairly and effectively,” Matt Rauschenbach, a spokesperson for the mayor, told Fox News Digital following Monday’s decision.

“This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from,” he added.

Mamdani also defended the tax before Monday’s ruling, arguing that revenue from high-value second homes would help fund city services including schools and public safety.

The mayor said only about 17,000 homeowners in a city of 8.5 million people were potentially affected and pointed to the administration’s decision to extend the deadline for homeowners to seek an exemption.

Thursday’s action does not decide which side is ultimately right.

The appellate case is proceeding with the City of New York, Mamdani, the Department of Finance and Finance Commissioner Richard Lee challenging the lower court’s order.

The city has told the appeals court that it is prepared to move forward with its appeal on an expedited basis.

Fox News’ Maria Paronich contributed to this report.