- Santa Fe voted overwhelmingly for a new tax on homes sold for more than $1 million.
- The new 3% tax will fund affordable housing construction and maintenance.
- The vote indicates strong support for so-called “mansion taxes” across the country.
Santa Fe wants its wealthiest residents to fund housing for the neediest.
On Tuesday, the New Mexico city overwhelmingly approved a so-called mansion tax, which will levy a 3% excise tax on residential property sold for $1 million or more and use the revenue to fund affordable housing.
The tax, supported by more than 73% of voters, only applies to every dollar over the $1 million threshold. For example, buyers would pay $30,000 in extra taxes on a $2 million home.
The new tax is expected to raise about $6 million annually for Santa Fe’s affordable housing trust fund, which is used to build and maintain low-income housing, and help low-income residents afford mortgages and rent.
Santa Fe has become an attractive home for retirees and digital nomads, who’ve bought up a significant amount of property since the pandemic hit. And a rise in real estate costs reflects that surge in demand.
“We’re attracting folks who can Zoom to work elsewhere and live in an outstanding place with great climate and culture and history and food,” Santa Fe’s Democratic Mayor Alan Webber told ABC News. “We’ve become a magnet, and we don’t want to lose the local community that has lived here all their lives, or for generations, and to suddenly see that diversity give way to only higher-income people.”
The Southwestern city isn’t alone. Several other major cities and states have proposed or recently passed mansion taxes, or some other tax increase to fund affordable housing.
Seattle voted on Tuesday to triple its property tax that funds affordable housing and aids low-income tenants. The larger measure replaces an expiring version of the tax and found broad support in the city.
Last year, Los Angeles passed the Homelessness and Housing Solutions Tax, which imposes a 4% transfer tax on all real estate sold for more than $5 million and a 5.5% tax on property over $10 million. The new tax, which applies to both commercial and residential real estate, went into effect on April 1, 2023. It’s expected to collect more than $900 million annually to be used for affordable housing construction and maintenance and to provide low-income tenants facing eviction with attorneys.
In Chicago, the city council recently advanced a proposal to bump taxes on homes sold for more than $1 million in an effort to raise more than $100 million to address homelessness. New York State has long imposed a one percent mansion tax on homes over $1 million, but in New York City the tax rises incrementally as the value of the sale increases, going up to 3.9% for homes sold for $25 million or more.
But some cities have turned down similar efforts. Voters in Cincinnati, Ohio on Tuesday rejected a proposal to create an affordable-housing construction fund by raising its earnings tax.