The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.
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.
Get Inman’s Luxury Lens Newsletter delivered right to your inbox. A weekly deep dive into the biggest news in the world of high-end real estate delivered every Friday. Click here to subscribe.
