Gothamist
A non-profit newsroom, powered by WNYC.
Gothamist
Listen Live
News
NYC homes hidden behind LLCs complicate pied-à-terre tax rollout
By
David Brand
Published Aug 26, 2026
Share
FacebookTwitterRedditEmail
Never miss a story
Email address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .
Michael M. Santiago/Getty Images
By
David Brand
Published Aug 26, 2026
Share
FacebookTwitterRedditEmail
We rely on your support to make local news available to all
Make your contribution now and help Gothamist thrive in 2026. Donate today
Gothamist is funded by sponsors and member donations
New York’s opaque corporate ownership rules are complicating Mayor Zohran Mamdani’s new tax on luxury second homes as officials struggle to determine exactly who owns and lives in posh pads potentially subject to the surcharge, a city attorney writes in new court documents.
Michael Smilowitz, the Department of Finance's general counsel, described the obstacles posed by wealthy New Yorkers masking property ownership behind limited liability companies in a letter defending the city’s implementation of the so-called pied-à-terre tax against a lawsuit filed by homeowners.
The city last month issued notices to roughly 17,000 addresses, informing the owners that they may be subject to the surcharge. Smilowitz told the court that “over half of the properties” that received the notices “are owned by trusts or entities such as partnerships, corporations and LLCs, rather than natural persons.”
The Department of Finance “lacks sufficient information about the structure and composition of such trusts and entities to determine whether a residential property owned by a trust or entity serves as the primary residence” of the actual person behind the corporation, Smilowitz wrote.
Mamdani and Gov. Kathy Hochul estimated the new tax could raise $500 million annually for the city. But LLC owners who elude the Department of Finance could escape the tax and lower that revenue figure.
The new pied-à-terre tax law exempts a property if the occupant holds a “majority interest” in the LLC listed in property records. But it can be nearly impossible for the public – and even city officials – to access that information.
Roughly 37% of Manhattan properties are owned by LLCs, according to a 2023 report by government reform group Reinvent Albany. State lawmakers that year approved a bill requiring limited liability companies to disclose their true owners to the state. But the measure locks those details from the public.
The pied-à-terre tax was enacted by state lawmakers as part of New York’s May budget agreement and will impose a property tax surcharge on stand-alone second homes valued at $5 million, as well as co-ops and condos worth at least $1 million that aren't primary residences. Hochul initially estimated about 13,000 properties would be affected by the surcharge.
In the new court filing, Smilowitz said more than 4,000 of the 17,000 property owners who received the notice have already been exempted or told they are no longer being considered for the surcharge based on more up-to-date income tax information. The state supplied 2025 income tax data after the city had already issued pied-à-terre tax notices.
The lawsuit was filed Aug. 7 by three property owners – including the wife and father of Republican Councilmember Frank Morano – who slammed the city’s tax rollout and the “mass confusion” it caused. Four additional owners, including real estate executive Kenneth Fishel, have since joined the complaint.
Before issuing notices to property owners who may be forced to pay the tax, the Department of Finance first published a “supplemental roll” of nearly 1 million addresses and owners.
The lawsuit sought to halt implementation of the tax. The plaintiffs and their attorney, former Deputy Mayor Randy Mastro, called the process “rushed” and said the massive supplemental roll created a source of “unwanted scrutiny of homeowners’ personal information.”
Mastro also criticized the city for blaming complications on LLCs, which he called “common ownership vehicles for family estate planning or privacy purposes.”
“The city’s notion that the burden should be shifted to prove primary residency in such circumstances not only doesn’t pass the smell test, but is also illegal, since the state authorizing statute requires the city to make that determination, not pass the buck to try to ensnare people into paying the surcharge,” he told Gothamist in an email.
A Staten Island judge initially paused the rollout, before the city appealed. The appeal allowed the Department of Finance to proceed with processing applications for exemptions and preparing to collect the tax.
Smilowitz and other city officials argued that the “supplemental roll” was required under state law and that the Department of Finance has taken several steps to ease concerns over release of the public information. A notice on the agency’s website now informs property owners that the listing does not mean their home is subject to the tax.
The Department of Finance has also extended the deadline for owners to apply for an exemption until Oct. 6.
Tagged
Politics
new york city
David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
Read more
Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
MORE news
Brooklyn city councilmembers look to silence Navy Yard's noisy raves
Citing complaints, the officials want the Brooklyn Navy Yard Development Corporation to end disruptive large events.
By
Joe Hong
Published Aug 29, 2026 at 10:00 a.m. ET
Foreclosures are soaring in the Bronx. Here's what's driving the spike.
First-time filings declined in NYC in the second quarter, but nearly doubled in the Bronx.
By
Joseph Capriglione
and
Herb Pinder
News
Foreclosures are soaring in the Bronx. Here's what's driving the spike.
First-time filings declined in NYC in the second quarter, but nearly doubled in the Bronx.
By
Joseph Capriglione
and
Herb Pinder
NYC says 2 more die from Upper East Side Legionnaires' outbreak, bringing toll to 11
By
Charles Lane
Nepali, Tibetan New Yorkers grieve the missing and dead in epic flooding
By
Arya Sundaram
NYPD seizes 580 pounds of cocaine in Queens, its biggest bust in more than a decade
By
Charles Lane
Never miss a story
Catch up on the most important headlines with a roundup of essential NYC stories, delivered to your inbox daily.
Sign upEmail address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .