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Chicago voters will decide in March whether to quadruple the transfer tax paid on real estate transactions worth over $1.5 million.
The Chicago City Council voted 32-17 on Tuesday to place the referendum on the spring ballot in an effort to raise money to pay for homeless services, a major victory for Mayor Brandon Johnson and allies on the council.
If passed, the transfer tax for the most expensive buildings would be four times higher than it is today. The issue was hotly debated and opposed by Chicago Realtors, which said Tuesday’s vote was expected even as it vowed to continue fighting the measure.
“We are in competition for investment with every city now,” the Chicago Association of Realtors said. “We should be rolling out the welcome mat, not making it more expensive to live and relocate business here.”
Under the measure, which has been dubbed “Bring Chicago Home,” the transfer tax on real estate sales worth less than $1 million would decrease slightly, from 0.75 percent today to 0.6 percent.
The tax on property sales between $1 million and $1.5 million would increase from 0.75 percent today to 2 percent if voters approved the referendum.
The graduated tax would be highest for all property sales above $1.5 million. Those transactions would be taxed at 3 percent, four times higher than the tax is today.
Proponents said the measure, if passed, would raise $100 million per year. The Realtors said the tax was volatile and not a reliable funding stream.
Alderman Nicole Lee, who voted in favor, pointed to the waves of buses that have been bringing migrants from areas near the border to Chicago, adding to existing pressures on the city’s homelessness services.
Lee also committed to working on the final referendum language, noting that the city’s commercial real estate industry was already struggling through record-high vacancy rates, a rapid slowdown in sales and an ensuing drop in prices.
“I acknowledge the concerns of our commercial real estate community that they have over this proposal in the midst of the current drop of commercial property sales in the city, and issues with filling downtown office space,” Lee said.