Chicago City Council puts ‘mansion tax’ on March 2024 ballot

The Chicago City Council is asking voters on the March 2024 ballot to approve or reject a tax increase on the sale of $1 million properties. The move will mainly hit commercial properties, adding to Chicago’s anti-business reputation.

Chicago voters will decide the fate of Mayor Brandon Johnson’s proposal to raise the real estate transfer tax on million-dollar properties. The Chicago City Council approved the referendum 32-17, and voters will have final say in March.

Currently, all Chicago real estate sales are taxed at 0.75%. The proposal would create a tiered structure based on the value of the property being sold.

What the plan does to the real-estate transfer tax

• Lowers it to 0.60% for properties worth less than $1 million.
• Raises it to 2% for properties worth $1 million-$1.5 million.
• Raises it to 3% if worth more than $1.5 million.

Those in favor of the plan argue the new revenue generated from the increase will help combat homelessness with investments in affordable housing projects, which are exempt from the tax.

Opponents argue the new structure would force landlords to raise rents on tenants to cover the costs and harm the real estate markets’ post-pandemic rebound. While Johnson dubbed it a “mansion tax,” the reality is $1-million-plus commercial properties sell far more often than residential properties: 9 to 1 from April 2021 to April 2022.

Johnson’s plan has also been criticized for failing to detail how the money will be used to impact homelessness.

If approved, it would not take effect immediately. Voters would simply give the City Council permission to enact the plan, potentially in 2025.

The “Bring Chicago Home” plan was one of Johnson’s biggest campaign promises. It will require a majority of voters’ approval in the March referendum. Below is the exact language that will appear on the ballot.

Shall the City of Chicago impose:

• A real estate transfer tax decrease of 20% to establish a new transfer tax rate of $3 for every $500 of the transfer price, or fraction thereof, for that part of the transfer price under $1,000,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by operation of state law, in which case the tax is to be paid by the seller; AND
• A real estate transfer tax increase of 166.67% to establish a new transfer tax rate of $10 for every $500 of the transfer price or fraction thereof, for that part of the transfer price between $1,000,000 and $1,500,000 (inclusive) to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by operation of state law, in which case the tax is to be paid by the seller; AND
• A real estate transfer tax increase of 300% to establish a new transfer tax rate of $15 for every $500 of the transfer price, or fraction thereof, for that part of the transfer price exceeding $1,500,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by operation of state law, in which case the tax is to be paid by the seller?

The current rate of the real estate transfer tax is $3.75 per $500 of the entire transfer price, or fraction thereof, and the revenue is used for general corporate purposes. The revenue from the increase (the difference between revenue generated under the increased rate and the current rate) is to be used for the purpose of addressing homelessness, including providing permanent affordable housing and the services necessary to obtain and maintain permanent housing in the City of Chicago.

□ Yes

□ No