Suppose a buyer closes this week on a $1,450,000 house inside Santa Fe city limits. Within 30 days of the transfer, that buyer owes the City $12,630. The seller owes nothing. If the same buyer paid the same price for a house outside the municipal boundary, the City's high-end excise tax would not apply.
Tuesday, October 27, 2026, marked one year since the tax became enforceable. After a full year of closings, the $1 million figure that gave it its nickname turns out to be the least useful number for working out what you will owe. Three things set the bill: the slope above the threshold, what the City counts as "consideration," and which side of the city line the parcel sits on.
The bill rises with the price
The City of Santa Fe's High-End Excise Tax page describes a 3% tax on the portion of the price above $1,029,000, the threshold in effect since May 1, 2026. That figure came from a 2.9% adjustment for 2025 inflation. The City says the threshold will be adjusted again every May 1, unless the consumer price index did not rise the year before.
Because only the amount above the threshold is taxed, selling for a dollar over the line costs the buyer three cents. The Santa Fe Association of Realtors' Q3 2026 quarterly statistics show where typical sales fell against that slope.
| SFAR area, single family | Q3 2026 median sale | Portion above $1,029,000 | Tax at 3% |
|---|---|---|---|
| Northeast–01 | $1,450,000 | $421,000 | $12,630 |
| Southeast (North)–3N | $1,295,000 | $266,000 | $7,980 |
| Total City | $683,500 | $0 | $0 |
In Q3 2026, the median sale in Northeast–01 and in Southeast (North)–3N was above the threshold, so at least half of the single-family closings in each area were. Across SFAR's city areas as a whole, the median was $683,500, well under it. Most in-city sales never touch the tax. In some parts of the market it is a routine closing cost.
The first payments followed the same pattern. The Santa Fe New Mexican reported that the City's first three receipts were $36,000, $17,550 and $5,175. At the $1,000,000 threshold in force then, those amounts point to sale prices of about $2.2 million, $1.585 million and $1.17 million. Even the smallest payment came from a sale about $170,000 over the line.
The City decides what counts as the price
The contract price is where the calculation starts, but it is not always the full amount taxed. The City's administrative rule for the tax defines consideration as the amount paid or the value of assets delivered for the transfer. A mortgage or other debt on the property is not deducted. The rule's exception is narrow: outstanding liens owed to the United States, the State of New Mexico, or a local government or district for taxes, special benefits or improvements are left out.
The rule also names concessions. These are benefits or discounts either party provides as part of the deal, such as paying the other side's tax lien or real estate commission, covering new appliances, or giving a repair allowance. The rule says "the value of concessions shall be included in the calculation of total consideration."
This is where Santa Fe negotiations most often get tangled. Inspection on an older adobe often ends in a repair credit. If the price is already above the threshold, that credit is counted in the total the City taxes. At 3%, every $10,000 of counted concession adds $300 to the buyer's bill. Moving a number from the price line into a credit line does not take it out of the calculation.
The city limit sets the rule
The administrative rule applies the tax to "all conveyances of real property located within the geographical boundaries of the City." Residential property means property inside those boundaries with one or more dwelling units. The rule leaves out multifamily buildings with 16 or more units on one lot under a single owner, and it separately defines undeveloped land as property without improvements.
When one sale includes land on both sides of the boundary, the tax applies only to "the part of the consideration fairly attributable to the portion of the property located within the City." Acreage on the edge of town can produce exactly that situation, and the split then has to be documented.
Buyers comparing areas through market reports should know that SFAR's "city" and "county" groupings are MLS areas, not municipal boundaries. SFAR lists Monte Sereno-23 among its city areas, for example. Whether a sale is taxed depends on the City's boundary, not on where a parcel appears in a quarterly table.
The Q3 2026 county figures make the comparison easy to see. SFAR's Northwest-24, 25, 25N, 25S county grouping had 58 single-family sales at a $1,677,500 median, with dollar volume up 38% from Q3 2025. Southeast (North)–3N, in the city grouping, saw dollar volume fall 38.1% over the same period. No source ties either change to the tax, and one quarter does not make a trend. Over the coming quarters, these two lines will show whether the boundary is affecting buyers' choices.
Who files, and when
The rule names the purchaser as the taxpayer. The process runs on a short clock.
- The buyer completes the City's High-End Excise Tax Report and Payment Voucher.
- If a title insurance agent handles the transfer, the agent collects the form and the payment from the buyer. Otherwise, the buyer sends both to the City, usually by wire.
- The deadline is 30 calendar days. The day all parties fully execute the transfer documents does not count.
Out-of-state and second-home buyers often close remotely, which can leave a buyer unclear on who is handling this step. The City publishes a contact address, [email protected], for questions about the rule.
A year of litigation, and money held in reserve
Santa Fe voters approved the measure in November 2023, by 73% according to the City. The First Judicial District Court enjoined it on May 24, 2024, four days before its scheduled May 28 start. On October 27, 2025, the New Mexico Court of Appeals dissolved the injunction, and the tax took effect that day.
The appeals ruling in Hill v. City of Santa Fe, A-1-CA-42062 turned on standing. The court found the plaintiffs had not shown they were harmed by the tax, and it did not rule on whether the ordinance itself is lawful. The Santa Fe New Mexican reported that the New Mexico Supreme Court then declined to review the case. The same report said the Santa Fe Association of Realtors responded that the question of the tax's lawfulness "has no final determination by the Court."
That New Mexican report also described a second suit, brought by one of the first buyers to pay the tax and seeking a refund and a declaration that the tax is unlawful. At the time of the report, the City's motion to dismiss had not been decided. The City's adopted FY27 budget lists the Hill result among its legal wins and separately says the City prevailed on "a second challenge to the High-End Tax," without naming that case.
The money has not been spent. The FY27 budget projects $1.5 million in High-End Excise Tax collections for the Affordable Housing Trust Fund. A footnote says that, because of ongoing legal challenges, "the City is collecting these funds and holding them unspent until further notice." Buyers who close now pay into a fund that has not yet released any of it.
Questions that come up
When does the threshold change next?
The next scheduled adjustment is May 1, 2027, based on the change in the western-region consumer price index for 2026. If that index does not rise, the threshold stays at $1,029,000.
Does the tax reach a vacant lot inside the city?
The rule defines residential property as property with one or more dwelling units, and it defines undeveloped land as property without improvements such as structures. Anyone buying a buildable parcel should confirm how a specific sale is classified with the City's Finance Department.
Does the old $1,000,000 threshold still apply to anything?
It applied to transfers through April 30, 2026. Some City materials still refer to sales over $1 million, but the City's updated section names $1,029,000 for transfers on or after May 1, 2026.
This post is general information, not legal, tax or financial advice. Confirm how the tax applies to your own purchase or sale with your attorney, tax advisor and title company.
If a repair credit or a parcel near the city line could change your number, Numi Hirsch and our team can work through the excise tax with you before an offer is written. Request a private consultation.
