More real estate organizations are speaking out against a proposal to triple taxes on sales of Chicago properties over $1 million, an idea brought back to the table as mayoral candidates try to find their place on the thorny issues of homelessness and affordable housing.
The measure, called Bring Chicago Home, is supported by mayoral candidate Brandon Johnson and opposed by his opponent Paul Vallas.
While it’s no surprise the Illinois REALTORS are against the proposal because the trade organization represents agents across the state who believe the tax would reduce prices and transaction volume in the high-end market and so their commissions, some commercial real estate players have spoken out against the idea since it also resurfaced during the election campaign.
It made the rhetoric around the issue more rounded than last year’s election race in Angelswhere the impact on commercial assets of a similar new tax hike on properties traded for $5 million or more was ignored before being passed by voters, sending market participants rushing to strike deals agreements before the measure takes effect next month and drying up funding for some properties.
Activists supporting the proposal in Chicago discussed the measure rejected by the city council last year, but they see a new way forward for Johnson.
It’s been dubbed the “mansion tax” because most residential buyers buying property over $1 million are likely to be at the upper end of the housing market, although the proposal would also hit real estate. trade, where $1 million is closer to the market entry point.
“We are absolutely opposed to that,” said Michael Mini of the Chicagoland Apartment Association, who approved Vallas on Monday as well as a multitude of other business groups in the region.
Easing the approval process for housing construction is the best way to alleviate the shortage of affordable housing, his group said.
Currently, Chicago’s one-time transfer tax costs $7,500 per million dollars of sale value. The proposal would more than triple that figure to 2.65%, or $26,500 to $1 million. The extra money would go entirely to addressing homelessness, but the proposal doesn’t say how or which city fund the money would go to. Supporters of Bring Chicago Home say the proposal would generate an additional $163 million per year.
It is unclear whether the measure has the support of the city council if Johnson is elected. Neither Johnson nor Vallas responded to requests for comment.
The additional real estate transfer tax echoes each candidate’s broader view of the industry and its support bases. Johnson’s support for some form of rent control has also raised red flags with real estate industry groups.
“Do we want that to be what we say to companies considering expanding here or coming here? Real estate transfer tax that affects all industries and all landlords, it affects commercial hotels, all businesses we want to come here and grow here and expand here,” said Jack Lavin of the Chicagoland Area of Commerce , who also endorsed Vallas on Monday. “All of these taxes are very concerning, especially when our small businesses are also facing all these other challenges.”
In addition, residential market leaders are also paying close attention to the fate of the transfer tax proposal. Illinois realtors spent a lot of money on aldermen races during the March election.
The group said it does not endorse the contestants and would not comment on whether they chose to provide financial support to Johnson or Vallas, but said it would not support Bring Chicago Home. He said the tax would make it more difficult for families in Chicago to pool their resources on small multi-family properties, and also noted that the tax would be “very volatile” and whether the housing market or the economy in general takes a city centre, tax revenues would decrease. .
“Illinois REALTORS supports dedicated funding to address homelessness and encourage homeownership,” group spokesman Anthony Hebron said in a statement. “This property tax increase will make it more expensive for everyone from grocers, healthcare facilities and small businesses to open in our neighborhoods. It’s a tax that makes real estate transactions even less affordable at a time when the affordability gap continues to widen exponentially across the city.
The timing couldn’t be worse to institute a new property sales tax, particularly one that affects commercial assets, which are already grappling with the impacts of the pandemic on their revenue streams as office tenants continue to reduce their workforce in the age of hybrid work schedules, said the Building Owners and Managers Association’s commercial real estate industry group.
“The reality is that downtown Chicago is suffering from record vacancy while real estate transactions and development are only a fraction of what they were in years past,” Amy said. BOMA Masters. “Increasing municipal property sales taxes by 253% will only discourage future investment. Right now, we need to focus on revitalizing our downtown and local neighborhoods to create more jobs and broadening our tax base is the best way to increase tax revenue without penalizing businesses and taxpayers.