Property buyers in the Windy City could be hit with a new tax increase when they purchase properties over $1 million. Here’s the whole story.
Tax Increase to Benefit the Homeless
In Chicago, the “Bring Chicago Home” plan originally suggested the real estate transfer tax increase from 0.75% to 2.65% only for property purchases over $1 million.
The profits from the tax increase would go towards “building permanent housing units for the homeless.”
Unfair
If passed, this would mean more than triple the one-time tax for property sales over $1 million, which includes commercial property purchases.
Increasing the tax for those with more money leaves many Chicagoans feeling like that’s “unfair.”
Extra Money for the City
Supporters of the new tax increase say it could bring in an additional “$163 million in revenue for the city annually.”
Alleviate Homelessness
According to the campaign’s website, the funds generated from this tax would be “legally dedicated to programs that alleviate homelessness, including assistance for children, veterans, and women recovering from domestic violence.”
Other Cities Doing the Same
The city of Los Angeles passed a similar tax law, which enacted a 4% tax rate on property purchases over $5 million.
Mayor Johnson Supports the Plan
Chicago’s mayor, Brandon Johnson, supported the real estate tax increase. In a post on X, Johnson said his administration is “committed to Bring Chicago Home, and to building consensus around providing affordable housing to combat homelessness” in the city.
Three-Tiered Progressive Structure
Johnson signed off on an amended “three-tiered progressive structure” for the real estate transfer tax.
First Tier
Under Johnson’s plan, properties sold for under $1 million would decrease from 0.75% to 0.60% in real estate transfer taxes. Johnson claims “most Chicagoans fall into this category” and will therefore see a decrease.
Second Tier
Property sales between $1 million and $1.5 million will pay a 2% tax, more than two and a half times what purchasers are paying now.
Third Tier
The final tier for property sales over $1.5 million is a 3% tax rate, four times the current rate. The more a property is purchased for, the higher the real estate transfer tax.
Over 68,000 Homeless in Chicago
A report released by the Chicago Coalition of the Homeless showed Chicago’s homeless population grew by 4% between 2020 and 2021.
Over 68,000 people in Chicago do not have a permanent place to call home.
Homeless Population
The homeless population in Chicago consists of people living in shelters, on the streets, and those temporarily staying with family or friends.
20,000 Homeless Children
Of the 68,000 homeless Chicagoans, approximately 20,000 of them are children. Mayor Johnson spoke out about the importance of providing housing for these children.
School Children Suffer
Johnson was a former public school teacher and talked about how difficult it is to have “real dialogue in a classroom setting when [the children] are economically unstable.”
Unstable Lives
Johnson said the children don’t want to focus on “comma splices and drawing conclusions” when their life outside school is “unstable.”
Burden on the Housing Market
Critics of the “mansion tax” are concerned the new tax could “further burden Chicago’s real estate.”
Mayor’s Top Priority
Mayor Johnson said, “Protecting the interests of working people is a top priority for me.”
He also called the proposal’s “progressive response” a “reasonable compromise” to help the city’s homeless while ensuring the commercial real estate market thrives.
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The post Is Chicago’s Latest Tax Increase Going to Doom the Housing Market, or Help the Homeless? Here’s What You Need to Know first appeared on Career Step Up
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