Big tax hike on pricey property sales gains traction in city

A business-backed Chicago civic group is calling for a big increase in the city’s tax on pricey property sales, including tripling the tax on trades of more than $5 million.

The Metropolitan Planning Council is calling for the increase to pay for efforts to fight homelessness, one of several proposals it is suggesting to candidates in the April 2 election, according to Crain’s.

The current tax is a straight $5.25 for every $500 of the property sale, or roughly 1 percent of the total. But the council wants a graduated system that changes the tax to .35 percent on sales of up to $500,000, 1 percent on sales between $500,000 and $1 million, 2.5 percent on sales of $1 to $5 million and 3.3 percent on sales over $5 million.

The proposed tax hike is just one of a number of possible tax increases that have some real estate experts on edge, worried about their effects on the luxury housing market and on big-ticket commercial real estate deals.

But the Council said 95 percent of sales in the city are for below $1 million, meaning most property owners would see no change in the tax they would pay.

Calls to raise the tax have been gaining momentum since the fall, when several proposals surfaced to raise it to pay for a variety of initiatives, including helping the homeless. Mayor Rahm Emanuel opposed the idea, but he leaves office in two months and the two women running to replace him, Lori Lightfoot and Toni Preckwinkle, both said they’d support some increase in the tax. [Crain’s] — John O’Brien