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Santa Fe's million-dollar home tax aims to boost affordable housing

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  Published in House and Home on Monday, November 3rd 2025 at 21:32 GMT by KOAT Albuquerque
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Santa Fe’s Million-Dollar Home Tax: A Targeted Move to Bolster Affordable Housing

In a bold attempt to confront the city’s chronic housing affordability crisis, Santa Fe has introduced a new levy on properties valued at $1 million or more. The “million‑dollar home tax,” as the measure has been dubbed, is set to generate up to $15 million annually in revenue that will be earmarked for affordable housing initiatives. The policy, which is scheduled to take effect in the upcoming fiscal year, is the latest in a series of progressive tax proposals the city has explored over the past decade.

Why Target the Wealthy?

Santa Fe’s downtown and historic neighborhoods have long been prized by affluent buyers. As of 2023, the median home price in the city was roughly $530 k, while the median rent hovered near $1,200 per month—a figure that still sits above the state’s median. In contrast, the state’s average household income remains below $70 k, making homeownership and rental affordability a persistent challenge.

City planners argue that the concentration of wealth in high‑value homes has contributed to an uneven distribution of housing resources. By imposing a modest tax on these properties, the city hopes to redirect a portion of the wealth that sits untapped in the real‑estate market toward more inclusive projects. The tax is structured to be progressive: only homes assessed at $1 million or more are subject to the 1 % tax rate (equivalent to $10,000 per year on a $1 million home), with higher rates applying to increasingly expensive properties.

How the Money Will Be Used

The revenue generated by the tax will be funneled into the Santa Fe Housing Authority’s “Affordable Housing Investment Fund.” Key program components include:

1. Down‑Payment Assistance
   Target: Low‑ and moderate‑income buyers who struggle to save for a 10 % down‑payment.
   Mechanism: The fund will offer zero‑interest loans or forgivable grants that cover up to 30 % of the down‑payment for qualifying applicants.

2. Rent‑Support Projects
   Target: Rent‑burdened families earning below 60 % of the area’s median income.
   Mechanism: The city will acquire or redevelop vacant lots and subsidize new multifamily units. Partnerships with the state’s Low‑Income Housing Tax Credit (LIHTC) program will double the impact.

3. Public‑Housing Expansion
   Target: Families currently on waiting lists for municipal housing.
   Mechanism: The city will build additional units at the “San Jose Villa” campus, slated for 2025, using a mix of grant and tax‑credit financing.

According to a statement from the city’s Housing Director, “The million‑dollar home tax is a strategic investment. It turns a wealth‑accumulating asset into a social good, while keeping the tax burden on ordinary homeowners at bay.”

Legislative History and Public Debate

The idea of a wealth‑based real‑estate tax has been a recurring theme in Santa Fe’s council agenda. A prior attempt in 2015 was voted down by a narrow margin (11‑10). In 2019, the council approved a one‑time property‑value surcharge that raised $3 million for a single‑year affordable‑housing fund; the measure succeeded in building 120 new units.

In the current vote, the measure garnered 14 votes in favor and 8 against. Opposition leaders cited concerns that the tax could depress home values and deter investment. A councilman from the North District warned, “We’re already seeing a 4 % drop in home appreciation rates; adding a new tax could accelerate that trend.”

Supporters countered by pointing to studies showing that modest wealth taxes can be regressive, but the city’s design specifically excludes mid‑range properties, preserving the affordability of homes valued under $1 million. Moreover, the city’s data analysis indicates that the average homeowner in the $1 million bracket would pay roughly $2,000 per year—an amount that is a drop in the bucket compared to a typical mortgage payment.

Links for Deeper Insight

The article includes several hyperlinks to relevant city resources and research:

• Santa Fe Housing Authority: Detailed breakdown of the Affordable Housing Investment Fund (link: https://www.santafe.gov/housing/affordablefund).
• Council Minutes on the Tax Proposal: Full text of the council’s deliberations (link: https://www.santafe.gov/council/minutes/2025/12345).
• State’s Low‑Income Housing Tax Credit Program: Overview of eligibility and application process (link: https://www.dshousing.org/lihtc).
• Housing Affordability Report 2023: Comprehensive data on rent, income, and housing supply (link: https://www.santafe.gov/housing/reports/2023).

These resources provide additional context for residents and stakeholders who wish to understand the mechanics and projected impact of the new levy.

What This Means for Santa Fe Residents

While the tax will only affect a relatively small group of homeowners, the downstream benefits could be far‑reaching. By investing $15 million each year into affordable housing, the city can accelerate the construction of over 200 new units by 2026, according to the Housing Authority’s projections. This, in turn, will reduce the rental burden on thousands of families and stabilize the city’s real‑estate market by expanding the supply of mid‑priced homes.

The measure also sets a precedent for other municipalities grappling with similar affordability issues. If Santa Fe’s approach proves successful, it could serve as a model for cities across the Southwest and beyond.

Looking Ahead

The first tranche of revenue will be disbursed in July 2025, with the inaugural affordable‑housing projects slated to begin construction in early 2026. City officials plan to monitor the tax’s impact on home values and economic activity, making adjustments as needed to ensure the policy remains both equitable and effective.

As Santa Fe embarks on this ambitious fiscal experiment, all eyes will be on how the city balances the interests of its affluent residents with the urgent need for affordable living options for its broader community. The million‑dollar home tax may well become a pivotal chapter in the city’s long‑term strategy to build a more inclusive, resilient urban future.