Yesterday, a proposed resolution to the real estate transfer tax was introduced to City Council that would raise the real estate transfer tax on properties over $1 million. In October, City Council will vote on whether the resolution will end up on the March 2024 primary ballot to be voted on by Chicago residents. The introduced language for the resolution can be read here.
Currently, transfer taxes for all properties are 0.75%. The proposed resolution would create a tiered, marginal structure on these taxes. This means:
- Anything up to $1 million would be taxed 0.6%
- Sales between $1 million and $1.5 million would be taxed 2% on the amount over $1 million
- Sales over $1.5 million would be taxed 3% on the amount over the $1.5 million mark
For example, a property that sells for $1.2 million would be taxed 0.6% on the first $1 million, and then taxed 2% on the $200,000.
Since Mayor Johnson was elected in April, our top priority has been to share our concerns about raising the city’s real estate transfer tax to fund homelessness services. Our Government Affairs team has met with the Johnson Administration and proponents to understand their plan for increasing revenue to bolster current services.
We believe due to market realities, this issue requires more substantial consideration. Funds allocated for homelessness in 2022 and this year were unspent. Therefore, our efforts are focused currently on educating Chicago city council members to vote no in October in advancing this to a referendum.
We oppose this legislation due to our concern for the short and long-term health of the real estate market in the following ways:
- The real estate transfer tax increase will make housing more expensive. Costs to purchase rental housing units are passed down to the tenants, contributing to rising rental costs.
- With rising interest rates, increased building costs and excessive property taxes, a tax increase now will make builders less likely to build more housing in Chicago moving forward.
- Many small neighborhood residential buildings with ground level retail are valued at $1 million or more. An increase could force grocers, healthcare facilities and small businesses out of neighborhoods.
- Many Chicago families pool resources to live in multifamily buildings and may rent out a unit – this tax takes away tens of thousands of dollars from families trying to build wealth.
- Our Government Affairs Team will be meeting with Chicago Aldermen to educate them and urge them to vote no.
- We are aware that there has been a variety of feedback from our members on this plan. We will be soliciting member feedback on the plan at an upcoming forum.
- Keep your eyes out for a potential Call for Action by signing up for REALTOR® Party Mobile Alerts: Text REALTORS to 30644.
- If you’re interested in learning more about this and other legislative issues in Chicago, make sure to register for our virtual Coffee with your GAD event on Tuesday, October 3.