– Mayor Brandon Johnson is proposing a “mansion tax” in Chicago that would increase transfer taxes for properties valued at $1 million or more.
– Mr. Beef, an Italian beef stand valued at $1,507,060, would be affected by this tax if it were to be sold.
– Under the proposed tax plan, Mr. Beef’s potential sale would incur a transfer tax of $16,212, compared to the current tax of $11,303.
– The proposed tax is estimated to generate $100 million in revenue for affordable housing and to help unhoused residents.
– A poll shows that 46% of Chicago voters oppose the proposed tax, while 42% support it.
– The “mansion tax” proposal will impact commercial properties more than residential properties, as commercial properties priced at $1 million or more are sold at a higher rate than residential properties of the same price point in Chicago.
– Mr. Beef gained national recognition with the Hulu series The Bear, leading to a surge in popularity and sales.
– The proposed tax plan aims to lower the current transfer tax for properties under $1 million.
Since its appraised value is over $1 million, the iconic Italian beef stand would incur significantly higher transfer taxes in a sale if Mayor Brandon Johnson’s proposed “mansion tax” passes next year.
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When is a one-story, no frills, Italian beef stand classified as a mansion? When the building the restaurant occupies is valued at $1 million or more, according to Chicago’s proposed “mansion” transfer tax, which voters will decide the fate of in March 2024.
That’s right — under the proposed transfer tax, Mr. Beef, the sandwich shop at 666 N. Orleans St. in Chicago that gained national recognition with the Hulu series The Bear, would incur a transfer tax that would increase the cost of the sale by nearly $5,000, Illinois Policy reported.
The modest shop is appraised at $1,507,060, according to the Cook County Assessor’s Office.
Under the current Chicago tax law, all properties incur a 0.75 percent tax on the sale. But under the proposed plan by Mayor Brandon Johnson, Mr. Beef’s hypothetical sale would see three additional tiered taxes: A 0.6 percent tax on the first $1 million of the sale, a 2 percent tax on the next $500,000 and a 3 percent tax on any amount that exceeds $1.5 million.
The first 0.6 percent tier of taxes would apply to both the buyer and seller side of the sale, and all remaining taxes would be paid by the buyer.
At the current 0.75 tax rate, Mr. Beef’s potential sale would incur a $11,303 transfer tax. Under the proposed law, that transfer tax would increase to $16,212 — an expense that any new restaurant owner would likely rather dispense with.
The proposed tax policy is estimated to bring in $100 million in revenue for affordable housing and to help unhoused Chicago residents, while also lowering the current transfer tax for most properties in the city (those under $1 million).
Passage of the proposed tax is not necessarily a shoo-in for Mayor Johnson, however — according to an Illinois Policy Institute poll of 800 Chicago voters conducted in mid-October, 46 percent oppose the plan and 42 percent support it.
Given prices in the Chicago real estate market, the so-called “mansion tax” proposal will impact commercial properties significantly more than residential ones. Sales of commercial properties priced at $1 million or more exceed residential sales of the same price point by 9 to 1, according to an analysis by Crain’s Chicago Business that was conducted from April 2021 to April 2022.
The Bear follows a chef’s return home to help run his family’s sandwich shop in the wake of tragedy, and includes all the trials that come with running a small business, including financial hardships.
Already a mainstay of the Chicago Italian beef stand scene, Mr. Beef’s popularity skyrocketed following the release of The Bear. The shop’s daily sandwich sales surged from roughly 300 per day to 800 per day, with staff at times keeping the shop open three to four hours past closing in order to accommodate queued-up customers, according to a story in The New York Times.
Property Chomp's Take:
Chicago’s proposed “mansion tax” has sparked controversy as it could potentially classify a one-story, no-frills Italian beef stand as a mansion. The tax, which will be decided by voters in March 2024, would significantly increase transfer taxes for properties valued at $1 million or more. In the case of Mr. Beef, a popular sandwich shop in Chicago, the proposed tax would add nearly $5,000 to the cost of a potential sale.
Mr. Beef, located at 666 N. Orleans St., has an appraised value of $1,507,060, according to the Cook County Assessor’s Office. Under the current tax law, all properties in Chicago incur a 0.75 percent tax on the sale. However, under Mayor Brandon Johnson’s proposed plan, Mr. Beef’s sale would be subject to three additional tiered taxes: a 0.6 percent tax on the first $1 million, a 2 percent tax on the next $500,000, and a 3 percent tax on any amount exceeding $1.5 million. The buyer and seller would both be responsible for the 0.6 percent tax, while all remaining taxes would be paid by the buyer.
If the proposed law passes, the transfer tax for Mr. Beef’s potential sale would increase from $11,303 to $16,212. This additional expense could deter potential buyers, especially for a modest sandwich shop like Mr. Beef.
While the proposed tax policy aims to generate $100 million in revenue for affordable housing and to assist unhoused residents in Chicago, it has faced opposition. According to an Illinois Policy Institute poll, conducted in mid-October, 46 percent of Chicago voters oppose the plan, while 42 percent support it. The tax is expected to affect commercial properties more significantly than residential ones, as sales of commercial properties priced at $1 million or more outnumber residential sales in the same price range by a ratio of 9 to 1.
Mr. Beef gained national recognition after being featured in the Hulu series "The Bear," which follows a chef returning home to help run his family’s sandwich shop. The show depicts the challenges and financial hardships faced by small business owners. Since the release of "The Bear," Mr. Beef saw a surge in popularity, with daily sandwich sales increasing from approximately 300 to 800. At times, the shop had to stay open several hours past closing to serve all the customers.
The proposed “mansion tax” has raised concerns in the Chicago real estate market, particularly among commercial property owners. The outcome of the vote in March 2024 will determine whether this tax policy becomes a reality and how it will impact businesses like Mr. Beef.