Chicago’s proposed real estate transfer tax, referred to by some as the “mansion tax” or “Bring Chicago Home,” has topped races to watch for the 2024 Illinois primary election.
As polls close Tuesday and votes are tallied, we’ll track how Chicagoans voted on the measure, which looks to increase the city’s real estate transfer tax on all properties over $1 million and use the funding to address homelessness.
What is the proposed real estate transfer tax and how would it work?
The real estate transfer tax is the tax paid to the city on any property sold. The current rate is a flat rate of $3.75 per every $500 of the price. If passed, the proposal would change the rate to a progressive, or graduated, structure on all properties, residential and commercial, with three tiers.
It would reduce that rate to $3 of every $500 for properties sold for under $1 million. For sales over $1 million, it would increase the rate to $10 for every $500 of the price between $1 million and $1.5 million. For properties over $1.5 million, the rate would become $15 for every $500 of the price more than $1.5 million.
The revenue raised by the tax increase would be dedicated to efforts to combat homelessness.
Proponents say it would lower taxes on the majority of home sales while projecting increase revenue of $100 million dollars a year. But those opposed warn it could seriously harm commercial real estate.
If Chicago’s measure passes, City Council would then have to pass an ordinance deciding how to spend the money. On that, Chicago Mayor Brandon Johnson has not released specific plans.
On Wednesday, the Civic Federation, a nonpartisan research organization, released an analysis of the proposal that highlighted “serious concerns.”
“The plans for the use of the funds generated by the Bring Chicago Home referendum are too unclear for any voter to sufficiently scrutinize,” the Civic Federation’s analysis reads, adding that the graduated real estate transfer tax “has some advantages, but it is a volatile, economically sensitive revenue source.”
The Civic Federation also took issue with the lack of detail in how the revenue would be spent, noting, “plans for use of the funds have not been publicly articulated beyond a presentation from the City of broad strategies to address homelessness and affordable housing.”
Johnson said that if the measure passes, he’ll work with aldermen to come up with a spending plan.
“The people’s voices are represented. Now we just need a little bit more so that we can actually respond to those needs,” Johnson said.
If it passes, the new rates would take effect Jan. 1, 2025.