New York City can proceed with preparations for a new tax on high-value second homes after a state appeals court overturned a lower court ruling that would have required the city to restart its implementation process, according to Patch.com.
The four-judge panel of the Appellate Division’s Second Department unanimously ruled Wednesday that property owners who challenged the rollout lacked legal standing because they failed to demonstrate direct harm from the process.
The Nov. 4 decision allows the Department of Finance to continue preparing tax bills ahead of a Nov. 15 mailing deadline.
The pied-à-terre tax applies to non-primary residences in New York City with assessed values of at least $5 million for one- to three-family homes and $1 million for condominiums and cooperative apartments.
The ruling has implications for property owners across Brooklyn and the other boroughs, particularly those who own high-value residences but maintain their primary homes elsewhere. However, properties must meet the tax's eligibility requirements to qualify.
The legal challenge began in August when homeowners accused the Department of Finance of improperly shifting the responsibility of proving primary residency onto property owners. They argued that the agency should determine residency status before issuing tax notices.
In September, State Supreme Court Justice Wayne Ozzi ruled in their favor, ordering additional reviews of potentially taxable properties and revised notices explaining the basis for the city's determinations.
The appeals panel reversed that decision, finding that state law allows property owners to submit evidence of primary residency and seek an exemption. The judges concluded that the Legislature had anticipated that some initial notices could reach owners who ultimately qualified for exemptions.
The ruling does not settle the broader legal battle over the tax. Two separate lawsuits challenging its constitutionality remain pending, leaving the measure open to further court scrutiny.
