Chicago’s real estate industry is preparing for a fight over a proposal to more than triple the transfer tax on any property sold for more than $1 million.
The proposal — called Bring Chicago Home — would create a non-binding referendum that would ask the Chicago City Council to increase real estate transfer taxes to 2.65 percent from 0.75 percent, according to Crain’s. The extra income would go toward helping the homeless.
While the industry is so far mostly silent on the proposal, Kris Anderson, the Chicago Association of Realtors’ vice president of government affairs, said they’re waiting until the City Council takes up the proposal to express their opposition. Anderson told Crain’s he’s prepared to “activate our 17,000 members against this” whenever the measure comes to the council’s agenda.
Should it pass, the measure would generate $158 million to address the city’s homelessness problem, according to an analysis of 2021 taxes by Crain’s.
A growing number of aldermen support the measure, and it has support from a group of 80 interfaith clergy members who asked Mayor Lori Lightfoot to support the measure.
“Anyone purchasing a million-dollar property can afford to pay a little bit extra in order to make sure others have a place to live,” Mike Eldridge, a member of the Jewish Council on Urban Affairs, which supports the tax hike, told Crain’s in April.
Real estate industry groups that oppose the proposal are laying low for now, but they say the argument that those who are buying at the top of the market have additional funds to address homelessness may appeal to many aldermen and voters — many of whom don’t own million-dollar homes.
“The idea that if a building is large and expensive, there must be someone sitting there who has a lot of cash is incorrect,” Farzin Parang, executive director of the Building Owners & Managers Association in Chicago, told Crain’s. “There’s a difference between asset cost and personal income.”
Parang said the increase could create more challenges for the already struggling commercial real estate industry.
Similar taxes are being considered in Los Angeles and New York, where, like Chicago, there’s been an increase in homelessness while the luxury real estate market recorded record growth through the pandemic.
“It’s not a broad-based tax on everyone,” Mike Kelly, director of government affairs at the New York State Association of Realtors, told Crain’s. “It’s a tax that only impacts people who are buying or selling these expensive properties. That looks better to legislators.”
Currently in Chicago a buyer pays $7,500 for every $1 million paid in the purchase price, which would increase to $26,000 per $1 million.
[Crain’s] — Miranda Davis