In a significant move to address the housing crisis in New Mexico's capital city of Santa Fe, voters have overwhelmingly approved a tax on mansions to fund affordable housing initiatives. According to the uncertified election results released on Wednesday, nearly 75% of voters supported the new tax on home sales exceeding $1 million.

Santa Fe, known for its stunning high-desert vistas, thriving arts scene, and distinctive stucco architecture, has been grappling with a shortage of affordable housing. The ballot measure was presented as a lifeline for various groups, including teachers, service-sector workers, single parents, and young professionals who struggle to afford local mortgages or face challenges paying rent.

This overwhelming endorsement of the mansion tax by Santa Fe voters demonstrates a growing public support for such measures aimed at funding affordable housing and combating homelessness. Last year, Los Angeles voters approved a tiered-rate tax on real estate sales of $5 million or more, while Chicago is considering a similar measure next year, starting with sales over $1 million.

The introduction of the mansion tax is expected to generate approximately $6 million annually for Santa Fe's affordable housing trust fund. This fund supports various initiatives such as providing price-restricted housing, offering down-payment assistance to low-income homebuyers, and providing rental assistance to prevent financial hardship and evictions. The trust fund distributes funds to affordable housing providers who can secure matching contributions from other government and nonprofit sources.

Under the new tax law, buyers of residential properties priced at $1 million or more will be subjected to the tax, while the first $1 million in value will be exempt. For instance, if a home is sold for $1.2 million, the tax will be levied on the additional $200,000 in value, resulting in a $6,000 contribution to the city's affordable housing trust fund.

This approval of the mansion tax represents a significant shift in Santa Fe's perspective, as voters have previously rejected prominent tax initiatives in the past. A 1% tax on high-end home sales was turned down in 2009, and a tax on sugary drinks to expand early childhood education was defeated in 2017. However, the Santa Fe Association of Realtors has filed a lawsuit aiming to block the new tax, arguing that the city has exceeded its authority under state law.

As the legal battle ensues, the implementation of the mansion tax in Santa Fe stands as a testament to the city's commitment to addressing the housing crisis. With the potential to generate substantial funds for affordable housing initiatives, this tax could be a crucial step in providing housing stability to those in need and ensuring a more equitable future for Santa Fe residents.