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BLOG / 09.30.26 /Kenneth R. Jacobs

Opposition to Pied-á-Terre Tax Law Gathers Momentum

New Billionaire Lawsuit Filed; Staten Island Court Issues Adverse Decision

 On Tuesday, September 29^th, Staten Island judge Wayne Ozzi — who had previously issued a Temporary Restraining Order barring New York City from enforcing the Pied-A-Terre Tax (“PAT Tax”) – issued a Decision and Order granting the request by a group of homeowners to stop enforcement of the current PAT Tax and force the City to “start over.” A copy of the Decision is available HERE.

Among other things, the judge stated that the way in which the PAT Tax was rolled out unfairly shifted the burden of proving inapplicability to homeowners, unreasonably rejected certain data provided by applicants seeking exemption, and lacked any of the specificity required under the statute for setting criteria for imposing a tax on a group. He also questioned the constitutionality of the statute, but did not address that issue in the decision.

Don’t start celebrating yet. As we reported in our prior Client Alert, under a different section of New York law [CPLR § 5519(a)(1)],  New York City automatically delays (“stays”) enforcement of an adverse lower court decision if it files an “affirmation of intention to move for leave to appeal.”  The City has already filed a Notice of Intent to Appeal, which should stay the judge’s latest decision. Furthermore, the Staten Island suit does not seek to invalidate the PAT Tax Act itself, merely the way in which it was implemented. But…

New Lawsuit Challenges Constitutionality of Statute.  On Monday, September 28^th, billionaires Wilbur Ross, his wife, and Stephen Wynn filed suit in Suffolk County claiming that the PAT Tax was unconstitutional. A copy of the Complaint is available HERE. Among other things, the suit alleges that the PAT Tax unfairly discriminates against non-New York residents who already pay substantial taxes without receiving services; unfairly interferes with interstate commerce; unfairly burdens cooperative corporations; and is not supported by any competent study showing that it will achieve its purported legislative purposes.  The court has not yet signed an Order to Show Cause or set a date for a hearing.

Stay tuned.  Anecdotal data is showing that the PAT Tax is already affecting the value of higher-end properties, even ones that currently fall below the threshold for taxation. Owners are expressing fears that once implemented, the PAT Tax will be broadened to apply to lower-valued homes (or even rental properties). They are also increasingly concerned about where the ceiling lies for taxation of real estate in New York City..

We will keep you informed as these suits progress. In the meantime, please note that the deadline for seeking an exemption from the Tax expires on October 6, 2026, and that if none is received, the January 1, 2027 tax bill for owners and for cooperatives will include the payment claimed.