New York City homeowners are joining a growing lawsuit against the city’s luxury second-home tax after officials sent thousands of incorrect notices, including one mailed to a neighbor 27 floors below the intended recipient.
Tax Notice Chaos Hits Primary Residents
Kenneth Fishel, a real estate executive living in his Park Avenue co-op for years, discovered the city Department of Finance sent his tax notice to a neighbor nearly 30 stories below him. He only learned about the letter after running into the neighbor in an elevator. When Fishel attempted to file an exemption, the city’s database claimed one had already been submitted, likely because the mailed notice listed incorrect names according to court documents.
Four new plaintiffs joined the lawsuit filed by attorney Randy Mastro seeking to halt the surcharge on luxury second homes. All claim primary residences in Chelsea and the Upper East Side but received notices threatening five-figure tax bills unless they filed exemptions. The tax targets properties worth at least $5 million for one-to-three family homes and $1 million or more for co-ops and condos that are unoccupied, non-primary residences.
Exemption System Fails Longtime Homeowners
Chelsea residents Stephen and Sandra Shore lived in their home for over 30 years and paid taxes regularly, yet received the notice anyway. The Department of Finance system repeatedly rejected their exemption applications, forcing them to send a registered letter just to submit their paperwork. Carnegie Hill resident Carla Stearns bought her brownstone with her husband in 2017 and received a notice for an estimated $55,000 in extra taxes despite owning no other property.
The city sent 17,000 notices alerting property owners to potential tax bills. City officials reported that approximately 4,290 homeowners who received warning letters contested them, with 1,906 approvals granted as of last week. All new plaintiffs received estimated tax bills between $45,000 and $58,000 according to mailed notices filed in court.
Legal Challenge Grows Against Mamdani Administration
The lawsuit claims homeowners continue to suffer irreparable harm attempting to apply for exemptions to a tax not designed to burden primary residents. Plaintiffs describe the city’s system as a tangled morass and messy, ill-considered exemption scheme that has failed to remove them from the potential tax list. State lawmakers and Governor Kathy Hochul approved the law in spring, but the Mamdani administration’s implementation has sparked fierce opposition and legal challenges from affected homeowners across Manhattan’s most expensive neighborhoods.