Chicago’s efforts to tax owners of high-end homes to raise cash to help the homeless are having more success than before.
With slim inventory of homes on the market drawing competitive bids, many home buyers won’t think twice about paying the additional tax, local real estate officials said, according to Crain’s. “[They] aren’t going to blink at paying one more fee, which is what this tax is,” Leslie Struthers, senior loan officer at the mortgage firm Guaranteed Rate, said.
That’s a complete shift from 2018, when Struthers said the proposed mansion tax “would be a significant deterrent for people who are stretching to afford a house.” The biggest difference, she says, is the housing market is healthier and people have more money to spend.
The Bring Chicago Home campaign submitted a proposal to increase the city’s transfer tax on property sales at $1 million or more. The current policy requires a buyer to pay a one-time $7,500 transfer tax for every $1 million in purchase price. The new proposal would more than triple the buyer’s transfer tax, to $26,500 per $1 million — a marked increase from the previously shot-down 2018 proposal, which would have raised the tax to $19,500.
The amount the sellers have to pay in transfer tax — $3,000 — won’t change under the new proposal.
“We know the city’s real estate market has been doing really well, it’s rebounding after the pandemic,” Mike Eldridge, a member of the Jewish Council on Urban Affairs, said. “And if we’re being honest, 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.”
The number of Chicago-area homes that sold for $1 million or more in 2021 hit a new high, up 19 percent from 2020 when the housing boom really kicked off. In the past 12 months, 2,535 of the 46,720 homes sold in Chicago went for $1 million or more.
The mansion tax would generate $163 million in funding for programs that combat homelessness, according to the campaign website. The group estimates the money from the tax would be able to provide housing for 12,000 families over the course of 10 years.
[CCB] — Victoria Pruitt