By Donna Reynolds, RCE, e-PRO, Government Affairs Director, Santa Fe Association of REALTORS®

Resources

• High-End Excise Tax Section of the Municipal Code
• City of Santa Fe High-End Excise Tax page

What is the High-End Excise Tax?

The High-End Excise Tax for Affordable Housing Ordinance (Chapter 18.18) is in effect as of Monday, October 27, 2025. The ordinance was scheduled to go into effect in May 2024 but a district court enjoined the ordinance before it went into effect finding the ordinance unlawful. On Monday, October 27, 2025, the Court of Appeals ruled against the Plaintiffs finding they had not demonstrated harm and dissolved the injunction, resulting in the tax applying on or after that date to residential purchase transactions exceeding $1 million dollars. Purchasers of residential property pay a 3% tax on the sale amount over $1,000,000. All the funds generated from this excise tax will go into the Affordable Housing Trust Fund.

Who Must Comply with the High-End Excise Tax and File?

All purchasers of real property located within geographic boundaries of Santa Fe City shall file a High-End Excise Tax Report and Payment Voucher Form within thirty (30) days of the date of the property transfer.

What This Means for REALTORS®

For sellers / buyers of homes in Santa Fe City (over the $1M threshold):

• Buyers will need to factor in this added cost: ~3% of the portion over $1M. For example, on a $1.2M sale the tax would be $6,000 (3% of the $200,000 over $1M). 
• If the tax is now upheld, sellers and listing agents must clearly communicate the tax to potential buyers so they are not surprised at closing.
• Listings priced just over $1M may see buyer hesitation or negotiation adjustments, given this added cost—so timing and pricing strategy matter.

For REALTORS® advising clients:

• If you have clients looking in Santa Fe City who are near or above the $1M mark, advise them on the tax implication and timing (pre- vs. post-tax implementation)
• Monitor the legal challenge: depending on outcome, the tax may be delayed, invalidated, or upheld—affecting market dynamics
• Consider how this might influence comparative pricing, buyer incentives, or closing timing in the Santa Fe City $1M home market segment
• Highlight to clients the fundraising purpose (affordable/workforce housing) which may resonate with socially-conscious buyers

Where does the tax go?

The City of Santa Fe created the Affordable Housing Trust Fund (AHTF) by ordinance in 2007. This ordinance follows state law, the New Mexico Housing Act, to support various affordable housing needs. The City releases an annual funding opportunity to support projects such as:

• Homeownership assistance
• Affordable Housing Development and Construction
• Rental Assistance for low-income renters
• Acquisition, Conversion, Rehabilitation, or other Preservation costs for existing structures

What Are Mansion Taxes?

A mansion tax is a progressive real estate transfer tax that comes into play when properties sell for above a certain sum. The home buyer pays the tax, which is a set percentage of the cost of the home, but the exact percentage may vary by state or locality. For instance, in California, buyers may pay as much as 4% tax on properties listed above $5 million and 5.5% on properties listed above $10 million. Meanwhile, in New York, buyers may shell out between 1% to 3.9% of their home purchase price on properties listed above $1 million. The term "mansion tax" may suggest large, sprawling homes and luxury properties – but the tax is applicable to any property, including condos, co-ops, or studio apartments. The tax is triggered by the purchase price of the property rather than the size. 

The burden of mansion taxes may fall on buyers in some states and sellers in others. The two parties may mutually divide transfer taxes between them, though this may come down to effective negotiation or seller concessions. For real estate professionals seeking to enhance their negotiation skills, the Real Estate Negotiation Expert (RENE) certification through NAR may be a valuable certification to acquire.

Advising Clients on Mansion Taxes

Brokers will likely need to spend some time understanding how new regulations apply and are enacted. Not every client will be affected by mansion taxes, and some may be willing to pay them to complete a desirable sale. That said, for brokers and sellers who want to find effective workarounds, it may be important to work with a lawyer to understand how any attempt to mitigate the tax may play out and avoid ​legal repercussions.

Additionally, new regulations and the news cycles that accompany them may push sellers to make emotion-driven business transactions such as sell well below market value or avoid selling altogether in hopes of a reversal of the tax ruling. In such instances, it may help for real estate brokers to step in and provide guidance on the best course of action based on market trends. 

Santa Fe City High-End Tax Exemptions

The tax imposed shall not apply to any of the following transfers: 

• Any conveyance of ownership of a dwelling unit that is sold subject to liens, deeds of trust, land use restrictions, or other instruments that ensure the unit will remain affordable; 
• Any conveyance of ownership of property wherein the United States, or any agency or instrumentality thereof, the state of New Mexico, any county, municipality, district or other political subdivision of this state, is either the grantor or grantee; 
• Any conveyance of ownership of property wherein the grantee corporation, association or trust has been organized, operated and maintained solely and exclusively for charitable or religious purposes; 
• Any conveyance of ownership of real property as a gift, where no consideration other than love and affection, charitable donation, or nominal compensation is evidenced by the terms of the instrument of transfer; 
• Any termination of a joint tenancy in real property except where additional consideration of value is paid in connection with such termination, or a decree or agreement partitioning real property held under common ownership unless a consideration of value is paid in connection with the transfer of title; 
• Transfer of title or change of interest in real property by reason of death, will, or decree of distribution; 
• Transfers made pursuant to mergers or consolidations of corporations, or by a subsidiary to a parent corporation for no consideration other than cancellation or surrender of the subsidiary's stock; 
• Any deed or conveyance made and delivered without consideration for the purpose of confirming, correcting, modifying, or supplementing a transfer previously recorded; making minor boundary adjustments, removing clouds on titles; or granting easements, rights-of-way or licenses; 
• Any decree or order of a court of record determining or resting title, including a final order awarding title pursuant to a condemnation proceeding; 
• Any deed granting or conveying title to cemetery lots; 
• Any lease of any real property (or assignment or transfer of any interest in any such lease) provided such lease by its terms does not constitute a de facto conveyance of the subject property. In the latter event, the tax shall be based upon the capitalization at five percent of the average annual rental over the entire term of the lease, including any renewal term, plus the actual consideration, other than rent, paid or to be paid; 
• Any mineral deed or royalty deed; 
• Transfers to secure a debt or other obligation, or transfers or release of property that is security for a debt or other obligation; 
• Any executory contract for the sale of real property under which the vendee is entitled to or does take possession thereof without acquiring title thereto, or any assignment or cancellation of any such contract; 
• Any deed or conveyance under execution, sale, or foreclosure sale under a power of sale or court decree of lien foreclosure, sheriff's deed, public trustee deed, or treasurer's deed; 
• Any deed or conveyance of commercial property; 
• Any deed or conveyance of undeveloped land; 
• Any deed or conveyance reflecting an interspousal transfer of real property; or 
• Any deed or conveyance of real property that is the principal residence of an eligible transferor in the case of a family transfer between parents and their children or between grandparents and their grandchild or grandchildren. 

Mansion Taxes for Real Estate Brokers

Understanding how mansion taxes work in your state or locality and which clients are most affected might be the top priority for many brokers. It may help to keep up with changing regulations and observe precedents set by other sales to best understand how to serve your clients. Clients with less experience purchasing expensive homes may require more guidance than those buying their second or third property. By staying informed, updating your materials, and proactively advising clients, you’ll continue to deliver high-value, data-driven counsel in the Santa Fe City real estate market and ensure your clients are complying with current law.