The Santa Fe Mansion Tax will move forward after the New Mexico Supreme Court declined to reconsider a lower court ruling that allows the tax to take effect. The decision clears a major legal hurdle for the city and brings the voter-approved measure closer to full implementation.
On Thursday, the state’s highest court denied a petition from the Santa Fe Association of Realtors that sought review of a Court of Appeals decision. That ruling had already found that the city acted within its authority when it approved the tax. By refusing to hear the appeal, the Supreme Court effectively ended one of the main legal challenges against the policy.
The Santa Fe Mansion Tax places a 3 percent excise tax on the portion of home sales that exceed $1 million within city limits. City leaders proposed the tax as a way to generate new revenue for affordable housing programs and services aimed at helping residents who are priced out of the local housing market.
The legal dispute dates back to October 2023, when real estate groups filed suit against the city. That challenge came just weeks before Santa Fe voters overwhelmingly approved the tax during a local election. Supporters argued that the measure was needed to address rising housing costs and growing inequality in one of the state’s most expensive real estate markets.
Opponents of the tax claimed the city did not have the authority to impose such a fee. They also argued that the measure could hurt the local housing market by discouraging high-end home sales. The Court of Appeals rejected those claims, ruling that Santa Fe followed proper legal steps and acted within its powers as a home-rule municipality.
The Supreme Court’s refusal to revisit that ruling brings finality to this part of the case. Legal experts say such denials often signal that the court sees no significant legal error or broader constitutional issue that needs review. As a result, the appeals court decision now stands as the final word on the matter.
Despite this setback for opponents, the legal battle over the Santa Fe Mansion Tax is not entirely over. A second lawsuit, filed in December 2023, remains active. That case was brought by one of the first homebuyers required to pay the tax after it took effect. The buyer argues that the tax was applied unfairly and raises additional legal questions that were not fully addressed in the earlier case.
City officials say they are confident the tax will survive the remaining challenge. They point to the strong voter support for the measure and the recent court rulings as signs that the policy rests on solid legal ground. The city has already begun planning how to use the expected revenue once collections become consistent.
Housing advocates have welcomed the Supreme Court’s decision. They say the Santa Fe Mansion Tax represents a critical tool for addressing the city’s housing crisis. Many local workers, including teachers, service staff, and first responders, struggle to afford homes in Santa Fe due to high prices and limited supply.
Revenue from the tax is expected to support affordable housing development, rental assistance, and other programs aimed at keeping long-time residents in the city. Supporters argue that asking buyers of luxury homes to contribute more is a reasonable way to share the burden of addressing the housing shortage.
Real estate groups remain critical of the policy. They warn that the tax could have unintended effects, such as slowing high-end sales or passing costs on to buyers. Some also worry that the measure could set a precedent for similar taxes in other New Mexico cities.
For now, the Santa Fe Mansion Tax is set to proceed as approved by voters. With one major lawsuit resolved and another still pending, the city is moving ahead while keeping a close watch on the courts. The outcome of the remaining case could further shape how the tax is enforced, but the Supreme Court’s latest decision marks a significant victory for Santa Fe’s effort to address housing affordability.
