Page 1 - Here’s who will pay how much if the transfer tax proposal passes 1.23.24

Here’s who will pay how much if the transfer tax proposal

passes

By Dennis Rodkin

In just under two months, Chicagoans will vote on one of Mayor Brandon Johnson’s signature proposals, the "Bring
Chicago Home" plan to reconfigure the real estate transfer tax to create a revenue stream for fighting
homelessness.

What will it cost if the referendum passes on March 19?

For homebuyers, the tab will be a little more than $15 million. That’s according to Crain’s research into what the
past year’s home sales would have generated if the new transfer tax, as revamped under Johnson in August, were
in place.

That tab is likely only about one-ninth of the total revenue generated by the increase, as the increased transfer tax
will apply not only to residential sales but to commercial sales. Many commercial properties sell for far larger
amounts than homes, and Crain’s past estimates have pegged the commercial sector's dollar volume at around
nine times residential’s.

The transfer tax is a one-time tax paid when a sale closes.

All together, in the past 12 months luxury home buyers in Chicago would kick $15.08 million into the pot the city
would use for services to prevent homelessness. Individually, their shares would run to nearly a quarter of a million
dollars. The buyers who paid $11.2 million for a Park Tower condo, the highest city home price of 2023, would have
paid an additional $223,000 in transfer taxes, on top of the $84,000 they paid under the existing structure.

Unless they’re super-wealthy, buying at the extreme upper end of the housing market, homebuyers are getting off
easier than they might have, says Justin Marlowe, director of the University of Chicago’s Center for Municipal
Finance. As originally proposed before Johnson was mayor, Bring Chicago Home would have applied an across-
the-board increase to the transfer tax for all property sales of $1 million and up, whether residential or commercial.

When Johnson agreed last summer to shift the proposal to a three-tiered tax, he “shifted much of the burden away
from residential properties and on to the highest-value residential properties and the commercial and industrial
properties,” Marlowe said.

The tiers — under $1 million, $1 million to $1.5 million, and over $1.5 million — will make less difference to a buyer
like Menashe Properties, which paid $45 million for a Monroe Street office building last year.

That's because nearly 97% of Menashe's purchase price would have been subject to the highest tier of taxes, and
only a little more than 3%, the first $1.5 million of the purchase price, would fall into the lower-tax tiers.

Here's a look at what homebuyers at various levels of the city’s housing market would pay under the proposed
Bring Chicago Home restructuring of the transfer tax.

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