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Chicago ‘Cloud Tax’ Could Impact Residential Real Estate

by Peter Thomas Ricci

Could Chicago’s real estate community be an implicit target of the city’s cloud tax?

chicago-cloud-tax-mls-mred-realtors-real-estate

Streaming sites such as  Netflix and Spotify may have been the explicit targets of Chicago’s “cloud tax,” but a closer examination of the law suggests higher costs for MLS users, as well.

The ruling, which places a 9 percent tax on cloud-based services and is expected to bring in $12 million in revenue, applies to charges incurred for:

[Obtaining] real estate listings and and prices, car prices, stock prices, economic statistics, weather statistics, job listings, resumes, company profiles, consumer profiles, marketing data, and similar information or data that has been complied, entered, and stored on the provider’s computer.”

That provision has some members of Chicago’s real estate community worried, and Brian Bernardoni, the senior director of government affairs and public policy at CAR, voiced that concern in an interview with NPR.

“We see this as akin to taxing a hammer each time you use it when you build a house,” Bernardoni said. “Tax policy is one of those things that not only people in the city of Chicago look at, but people across the country look at. And when we add new taxes, we add another cloud around the city saying this is not a good place to do business.”

The True Impact of a ‘Cloud Tax’

The city has promised revenue-based exemptions for tech startups, though members of Chicago’s tech scene are considering a legal challenge to the tax.

A more complete statement on CAR’s website did offer two essential clarifications on the cloud tax. Firstly, the tax will not impact commercial or residential property leases. And secondly, it’s not entirely certain how the tax will impact agents’ day-to-day business, though it is a matter CAR is investigating.

“The Chicago Association of Realtors is working in coalition with other real estate trade groups and tech firms in assessing the full impact and applicability of this ruling on real estate listings,” the statement read. “It may have implications to taxes on real estate databases such as the MLS. As the ruling states, it applies to ‘transactions to obtain real estate listings and prices and similar information or data that has been compiled, entered and stored on the providers computer.'”

“We will report on this issue frequently, as the situation is extraordinarily fluid,” the statement read.”We are working to determine the full impact of the ruling.”

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