Chicago’s Proposed Documentary Transfer Tax Increase Hits a Roadblock
The Chicago chapter of the Building Owners and Managers Association (BOMA) filed a lawsuit last week to block a referendum vote on Mayor Brandon Johnson’s proposal to increase documentary transfer taxes on real estate property sales. Documentary transfer taxes in Chicago are currently imposed at a flat rate of 0.75% on the sales price of a property.
Mayor Brandon Johnson’s proposal would create the following tiered documentary transfer tax structure:
- A 0.6% rate would be imposed on properties with a sales price up to $1,000,000.
- A 2.0% rate would be incrementally imposed on properties with a sales price between $1,000,000 and $1,500,000.
- A 3.0% rate would be imposed on portions of a property’s sales price in excess of $1,500,000.
Mayor Brandon Johnson hopes the proposal will raise more than $100,000,000 annually in revenue. Proceeds are expected to go to affordable housing and homeless services.
The group’s court filing appears to center on the bundled, three-part nature of the proposed ballot question. The complaint relies on precedent set by the Supreme Court of Illinois, which alleges that ballot questions should be able to stand on their own (“self-executing”). The complaint also claims that the syntax of the ballot question aims to manipulate voters into approving two separate tax increases, which would be in violation of the Illinois Municipal Code and Illinois Constitution.
If Mayor Brandon Johnson’s proposal makes it on the primary election ballot on March 19th, the referendum would need to be approved by a majority of voters. It would then require a separate vote by the City Council to be enacted into law.
Sources: Bloomberg Tax, BOMA and CoStar
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
Comments are closed.