President Donald Trump escalated his feud with New York City Mayor Zohran Mamdani on Tuesday, saying his administration is examining whether the federal government can block the city's new tax on second homes owned by wealthy, out-of-state residents.
The threat came a day after a state court judge temporarily halted the city from enforcing the pied-a-terre tax, deepening the legal fog around a policy that has already ensnared thousands of longtime residents who say they were wrongly targeted.
In a post on Truth Social, Trump wrote that the tax "is costing New York City and State a fortune in that the money, eventually to be gotten, is very little compared to to the TAXES PAID by the tens of thousands of people who are fleeing the City, never to return," arguing that Florida and Texas are benefiting from what he sees as a profound exodus of wealth.
Benjamin Williams, leader of the Property Tax Department at Rosenberg & Estis, said the president "raises a legitimate economic question" around the tax, but added that it's too soon to say it would drive the ultra-wealthy out of the Empire State in such droves.
"Anecdotally, I do have clients with true pied-à-terres who are considering selling them," he said in an emailed statement to InvestmentNews. “Interestingly, though, the loudest complaints I’m hearing are from full-time New York City residents who can inadvertently get caught by the tax because of the unusual way the law treats trusts, LLCs and other ownership structures."
Trump said on Tuesday that he is "looking to see if the Federal Government has any legal right to avert this disaster, before it is too late, for the millions of people who cherish New York and want to see it thrive."
"I don’t see an obvious unilateral power for the President simply to stop the tax," Williams said. "This is a New York State law administered by New York City. Any federal challenge would need a specific constitutional or statutory basis.
Trump's comments followed a ruling from Staten Island Supreme Court Justice Wayne Ozzi, who ordered the city to stop posting a public list of roughly 960,000 properties flagged as potentially subject to the surcharge and to pause further enforcement action tied to it.
The order, reported by CNBC and other outlets, came in a lawsuit filed by three homeowners and argued by attorney Randy Mastro.
After the ruling, Mastro said the court's decision "vindicated the rights of hundreds of thousands of New York City homeowners who were subjected to a process they never should have been a part of in the first place," according to CNN.
Wiilliams, the tax expert from Rosenberg & Estis, was not surprsed at the legal challenge against the tax.
"When a new tax of this significance is implemented on an accelerated timeline, with taxpayers receiving notices while important procedural and compliance questions are still being sorted out, litigation is an almost predictable consequence," Williams said.
The city has moved quickly to challenge that order. Mamdani's office said the administration intends to appeal, and the mayor told reporters Monday "we look forward to vigorously defend our city's position in court," adding "we are confident in our position."
From where he stands, Williams said the case is more likely to impact the timing of the tax than its long-term future, with the Big Apple going "business as usual" with the rollout assuming it ultimately prevails.
"If the plaintiffs prevail, the City may have to pause, address the procedural deficiencies identified by the court, and reset the process, but the tax itself is unlikely to disappear," he said.
The surcharge, approved by state lawmakers in Albany this spring, was designed to apply to one-to-three-family homes worth at least $5 million and co-ops or condos valued above $1 million that sit vacant or serve as secondary residences. City officials have said it could generate roughly $500 million a year, money the administration has earmarked for affordability programs.
But rather than the narrow group of second-home owners officials initially projected, the city's Department of Finance reportedly mailed notices to 17,000 property owners over the past few weeks. A separate list identified nearly a million properties for potential review – far beyond Governor Kathy Hochul's office's earlier estimate of about 10,000 taxable second homes. That mismatch has left many full-time, primary-residence homeowners fighting bills they say shouldn't have hit them, forcing them into an appeals window that varies depending on whether they are disputing residency status or the city's property valuation.
"We use existing information that we have, and it could have been that we don't have updated information on their applications," Department of Finance Commissioner Richard Lee said at a recent press briefing when asked why it sent out notices without filtering out more owners.
A hearing on the lawsuit against New York has been scheduled for the end of the month. In the meantime, Williams is encouraging property owners who received the original July surcharge notices to not sit stll and "keep their paperwork moving."
"A courtroom delay should not be mistaken for a tax holiday,” he said.
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