Strike One: Appeals Court Dismisses First of Three PAT Tax Challenges
November 6, 2026Since going into effect on July 1, 2026, New York City's property tax surcharge on "luxury" second homes (the so-called "pied-a-terre tax" or "PAT Tax") has been challenged in three separate lawsuits -- O'Brien v. City of New York, Ross v. State of New York, and Friedman v. The State of New York.
On November 4, 2026, the Appellate Division of the New York Supreme Court dismissed O'Brien on narrow standing grounds, finding that the plaintiffs in the case had suffered no actionable injury and therefore had no basis to sue. While further appeals may be potentially available to the O'Brien plaintiffs, their chances of success on the merits appear increasingly dim.
With little activity since their initial filings, the Ross and Friedman challenges remain in their early stages. These two cases both argue that the PAT Tax is fundamentally invalid on federal and state constitutional grounds -- in contrast to O'Brien's more limited view that the PAT Tax roll-out was merely procedurally defective and could be cured with a "do-over." Despite challenging the fundamental validity of the PAT Tax, neither the Ross nor Friedman plaintiffs are seeking immediate injunctive relief while their challenges are pending.
As a practical matter, none of the ongoing litigation has any real impact on immediate PAT Tax compliance – at least for the current 2026/2027 property tax year and the upcoming 2027/2028 property tax year. As no interim court order suspends the PAT Tax while the three cases wind their way through the judicial system, the PAT Tax remains in full and complete effect as originally drafted. So, taxpayers should continue pursuing any available PAT Tax exemption or reduction for current 2026/2027 property tax year. Furthermore, because the PAT Tax testing date for the upcoming 2027/2028 property tax year is approaching rapidly on January 5, 2027, taxpayers cannot delay dealing with their future PAT Tax exposure -- especially if action needed to claim a PAT Tax exemption must be taken before the testing date (such as restructuring ownership or securing a tenant). If the PAT Tax is later found to be invalid, then anyone who has paid PAT Tax in the interim will have to seek a refund.
If you need more information about the PAT Tax or have questions about how the PAT Tax applies to your particular situation, please contact:
Mark A. Limardo at +1 (212) 592-1494 or [email protected]
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