A Staten Island judge has ruled that New York City’s implementation of a tax on high-value second homes was flawed, dealing a significant setback to Mayor Zohran Mamdani’s effort to raise revenue from wealthy property owners. Justice Wayne M. Ozzi of the State Supreme Court on Staten Island handed down the decision on Tuesday, siding with a group of homeowners who challenged the city’s approach to administering the new tax.

The lawsuit did not dispute the legality of the tax itself—commonly referred to as the pieds-à-terre tax—which was introduced earlier this year by New York Governor Kathy Hochul and supported by Mayor Mamdani. The tax aims to generate about $500 million annually to fund city services by imposing higher levies on expensive secondary residences in New York City. It was widely seen among supporters as a fulfillment of Mamdani’s campaign promise to “tax the rich” and received backing from voters and city officials alike.

However, the plaintiffs argued that the city’s Department of Finance failed to adequately identify which properties should be subject to the tax before beginning collection efforts. Justice Ozzi agreed, writing that homeowners have been “substantially harmed and penalized needlessly” due to the department’s flawed rollout strategy.

The court’s decision mandates that the city revisit and revise its implementation procedures, requiring a more thorough and accurate assessment of which homes qualify for the tax. City officials had faced criticism for the rapid and, some argue, haphazard manner in which the tax was put into effect, with some homeowners contending that the process caused confusion and unjust financial burdens.

Mayor Mamdani’s office has not yet publicly responded to the ruling. The decision could slow or complicate the city’s plans to collect the new revenue, potentially affecting the anticipated budget gap closure intended by the tax.

As it stands, the ruling reinforces ongoing debates over the administration of the tax and its impact on property owners, while highlighting the challenges municipalities face when implementing new, complex revenue measures on tight timelines.