Mayor Brandon Johnson is being urged by his transition team to stay true to his campaign promise to triple the one-time city transfer tax on property sales of $1 million and more, a proposal that triggered much of Chicago’s real estate community.
Johnson’s transition team this week released a 223-page report, put together by its nearly 400 appointees who served on 11 subcommittees tasked with recommending policy steps to address issues ranging from affordable housing, sustainability, public safety and taxes, Crain’s reported.
The so-called “mansion tax” — a bit of a misleading nickname as the increase would likely hit commercial properties harder than residential — is also supported by the transition members, and would triple the transfer tax rate for real estate deals sales of $1 million or higher.
The tax rate would jump to 2.65 percent of the sale price from 0.75 percent now, if the proposal is passed. A transfer tax is a one-time fee that happens upon purchasing a property, and the proposed increase to the city’s tax would come on top of taxes already paid to the state and Cook County on most deals, regardless of their price.
The transfer-tax increase, which has been pushed as part of the Johnson-backed Bring Home Chicago initiative meant to eliminate homelessness, would result in an extra $163 million a year that would be used to curb homelessness and alleviate the city’s affordable housing crisis, according to the Johnson transition team.
Los Angeles passed similar legislation that took effect earlier this year, applying a mansion tax for sales of $5 million or more to put the revenue toward solving its homelessness issue. Although months into the new tax being on the books, it’s generated much less revenue than proponents predicted.
Opponents say that taxes are already too high in the Windy City, as it has the second-highest commercial property taxes in the nation. If the legislation is passed, Chicago’s transfer-tax rate would be the second-highest in the U.S., only behind Philadelphia.
It’s no surprise that Johnson’s transition team is pushing for the mayor to act on his campaign promise to more than triple the transfer tax rate. The Bring Chicago Home campaign’s Julie Dworkin was named as one of Johnson’s leading housing subcommittee transition team members. The next steps for the proposal are unclear, though. The report recommends the mayor’s office work to build more support for the measure among city council members.
The report also said that Johnson’s team wants to “double down” on core industries like manufacturing, life sciences, transportation, logistics, food innovation finance and technology. Simultaneously, Johnson wants to expand growing industries such as cannabis cultivation to harbor “inclusive growth,” CoStar reported.
As additional measures to combat homelessness, the administration hopes to provide property tax relief, build more transit-oriented projects and increase the supply of affordable units by 35 percent over four years.
— Quinn Donoghue
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