Testing the Tax

The Santa Fe Association of Realtors wants First Judicial District Court Judge Bryan Biedscheid to stall a tax on high-end home sales until its lawsuit against the measure has its day in court.

Two new motions filed Monday in the case SFAR brought against the City of Santa Fe in October 2023 ask the court for an injunction on the housing tax that voters approved in the November election—which imposes a 3% tax on the portion of a home sale that exceeds $1 million—and for the court to decide in summary judgment whether the city has the legal authority to impose the ordinance.

“In light of the fact that a purchaser could land in jail if the tax isn’t paid, these legal issues need to be resolved before implementing the tax,” Drew Lamprich, the past president of the Santa Fe Association of Realtors, said in a news release.

In the new motions, the association and two named property owners Kurt Hill and Richard Newton, reiterated arguments that the state Supreme Court has ruled that New Mexico law denies home rule municipalities the power to impose the tax.

“In sum, the ordinance exceeds the legal limits on the City’s taxing authority, and if it is enforced, it will irreparably injure Plaintiffs’ rights under the Constitution of the State of New Mexico,” attorneys for the plaintiff argue in the motion for injunction. “This threatened injury outweighs any potential harm to the city from the requested injunction, and the enforcement of an illegal ordinance is never in the public interest.”

The Realtors’ statement calls the tax “well-intentioned and popular,” but notes its case has “merit and should be considered by the court.”

Unless the court takes action in favor of realtors, the tax will go into effect on May 28. The court scheduled a hearing on the city’s motion to dismiss the case for Feb. 26.

City Attorney Erin McSherry wrote a memo on her opinion that the tax was legal, and the city subsequently filed a motion to dismiss the case due to a lack of “strong arguments” from realtors, as well as substantial public support—73% of 20,856 voters cast ballots in favor of the measure which would put tax revenue into the city’s Affordable Housing Trust Fund.

McSherry tells SFR the city is reviewing the pleadings and awaits the scheduled hearing.