Is the house inside the City of Santa Fe? For years that question came up mostly over trash pickup or which department handled a permit. Since October 27, 2025, it decides whether a buyer of a home over roughly a million dollars brings five figures more to closing.
That is when the New Mexico Court of Appeals dissolved the injunction against the City's High-End Excise Tax for Affordable Housing, and the ordinance took effect. The tax applies to conveyances of real property "located within the City." Many homes outside that boundary still use a Santa Fe mailing address. So in the upper market, comparing two homes at the same price now also means comparing jurisdictions.
The arithmetic, at prices this market actually sees
The tax is 3% of the purchase price above a threshold, and the purchaser pays it. Revenue goes to the City's Affordable Housing Trust Fund. The threshold began at $1,000,000. On May 1, 2026, it rose 2.9%, based on the Consumer Price Index for calendar year 2025, to $1,029,000. It will be recalculated each May 1, and it stays the same in any year the index does not rise. One older paragraph on the City's page still says $1,000,000. The updated threshold notice above it is the current figure.
The City's administrative rule lays out the calculation: start with the total consideration, subtract the non-taxable amount, and multiply what remains by 3%. Here is what that comes to at the current threshold:
| Purchase price | Taxable portion above $1,029,000 | Tax at 3% |
|---|---|---|
| $1,029,000 | $0 | $0 |
| $1,200,000 | $171,000 | $5,130 |
| $1,500,000 | $471,000 | $14,130 |
| $1,677,500 | $648,500 | $19,455 |
| $2,000,000 | $971,000 | $29,130 |
In Q3 2026, $1,677,500 was the median single-family price in the Santa Fe Association of Realtors' County Northwest grouping, which includes Las Campanas. That area is outside city limits, so at that median the tax was zero.
A Santa Fe address can sit outside the City
The rule defines residential property as real property "located in the geographic boundaries of the city of Santa Fe." The test is the boundary, not the postal address.
Some of the most sought-after addresses in the area are in unincorporated county. The Las Campanas Owners Association says Las Campanas is "an unincorporated subdivision within Santa Fe County." Santa Fe County's draft Tesuque Community Plan describes its planning district as lying just north of Santa Fe in the unincorporated area of central Santa Fe County.
Other areas take more care. We have not found an official statement that settles city or county status for whole neighborhoods along Bishop's Lodge Road, Hyde Park Road or Tano Road. In those areas the answer depends on the parcel. The City publishes a City Limits & Roads map, and its annexation maps cover the phased annexations, including a Phase 2 marked complete as of December 31, 2013. A title company can also confirm a parcel's status.
The rule also covers a parcel that straddles the line. The tax applies "only with respect to the part of the consideration fairly attributable to the portion of the property located within the City," and the purchaser documents a reasonable basis for that split. On larger acreage near the edge of the city, a buyer may end up with an apportionment exercise as well as a tax line.
What changes between contract and closing
Three parts of the administrative rule matter most once a buyer and seller start negotiating.
- Concessions count toward the price. The rule defines a concession as a benefit or discount from either party. Its examples include paying the other side's commission, covering new appliances, or an allowance for repairs. The value of concessions "shall be included in the calculation of total consideration." On a property above the threshold, a repair credit and a price reduction of the same amount may not produce the same taxable figure.
- The title agent collects the tax. Purchasers file a High-End Excise Tax Report and Payment Voucher within 30 days of the transfer. When a title insurance agent handles the closing, the agent collects the form and payment, verifies the purchaser's identity and the property address, and notarizes the form.
- Remote buyers have an alternative. If the purchaser is not in Santa Fe for closing and the voucher is the only document that needs notarizing, the title agent may verify identity with a valid US passport or a federally compliant REAL ID. A copy goes to the City with the un-notarized form. This comes up often for second-home buyers who close from out of state.
The ordinance also lists exemptions. Among them are gifts with no consideration beyond nominal compensation, transfers by death or will, interspousal transfers, and a qualifying family transfer of a principal residence between parents and children or grandparents and grandchildren. Undeveloped land, commercial property and units sold under recorded affordability restrictions are also exempt. Because raw land is exempt, a buyer who purchases a lot inside the city and builds pays no excise tax on that lot purchase.
What the Q3 2026 numbers show, and what they don't
The tax has now been in effect for almost a year. The SFAR Q3 2026 quarterly report, current as of October 1, 2026, shows city and county single-family sales moving in opposite directions.
| SFAR area, single-family | Q3 2025 sales | Q3 2026 sales | Q3 2026 median | Dollar volume change |
|---|---|---|---|---|
| City Northeast, area 01 | 34 | 41 | $1,450,000 | +12.4% |
| City Southeast North, area 3N | 42 | 31 | $1,295,000 | -38.1% |
| Total City | 241 | 199 | $683,500 | -20.8% |
| County Northwest, areas 24/25 | 41 | 58 | $1,677,500 | +38.0% |
| County North, areas 15/16 | 12 | 9 | $950,700 | -7.7% |
| Total County | 165 | 185 | $839,900 | +15.5% |
SFAR's MLS area descriptions explain the geography. Area 01 lies north of East Alameda and Upper Canyon Road, east toward Hyde Park Estates. Area 3N lies south of those roads and north of St. Michael's Drive and East Zia Road. Area 24 is "Las Campanas subdivisions only." Area 15 covers Tesuque Village and the area north of Pedregal Place, including Bishop's Lodge Road. These descriptions date from a 2014 revision, so a borderline parcel needs a current check.
These figures do not show a clean move of buyers from the city to the county. County Northwest grew sharply, and the typical sale there was well above the threshold. But city Northeast, where the Q3 2026 median buyer would have owed about $12,630, also gained sales and volume. County North, which is untaxed, lost both. The report attributes none of these changes to the tax. One quarter of area-level data, with this few sales, can line up with the tax without showing that the tax caused anything.
A tax in effect, with money set aside
The tax is in effect, but the legal story is not fully over. The Appeals Court decision rested on the original plaintiffs' lack of standing and did not rule on whether the tax itself is lawful, as the Santa Fe New Mexican reported. The New Mexico Supreme Court later declined to review that ruling. A homebuyer who paid the tax filed a second suit seeking a refund. The City's FY27 adopted budget says the City prevailed on that second challenge. The same budget says collections are being held unspent until further notice because legal challenges continue, and it projects $1.5 million in collections.
The only actual collection figure we have found is early. KRQE reported on December 1, 2025, that three payments totaling about $60,000 arrived in roughly the first month. We have not found a published cumulative total for 2026.
FAQ
Does the seller pay any of the tax? The ordinance places it on the purchaser, and the title agent collects it from the purchaser at closing. How the cost affects negotiations is up to the parties.
Will the threshold change before a closing next spring? It is recalculated each May 1 from the prior year's CPI. A closing on or after May 1, 2027, may face a different threshold than $1,029,000.
Is a vacant lot inside city limits taxed? Conveyances of undeveloped land are on the ordinance's exemption list.
This post is general information about how the ordinance works, not legal, tax or financial advice. Please confirm how it applies to your purchase or sale with your attorney, tax advisor or title company.
If you are weighing a home on one side of the city limit against a home on the other, Rachele Griego can help you confirm a parcel's jurisdiction early and plan for the closing figures it brings. Let's connect and start your Santa Fe search.
