Selling your home in Chicago can be tricky, but one thing you might not have considered is the real estate transfer tax. These taxes are assessed whenever a property changes hands, acting as a charge for transferring the property title from the seller to the buyer. These taxes can affect your bottom line, so it’s important to have a strong understanding of what you might pay in your market. Our guide will cover how transfer taxes work in Chicago, detailing what sellers can expect to pay when parting with their property and what exemptions might exist. From state and county taxes to city-specific levies, we’ll cover how the Chicago transfer tax works and how to estimate these costs for your home sale. Real estate transfer taxes are levied by state or local governments when the ownership of a property shifts from one party to another. This taxation occurs at the moment the property’s title, which is the official document proving ownership, is handed over to a new owner. Like other markets, the Chicago transfer tax concept is simple: it’s a fee imposed by the government to transfer real estate within its jurisdiction. The amount owed in transfer taxes can vary significantly, depending on the property’s location, as different states, counties, and cities may have their own rates and regulations regarding these taxes. The primary purpose of these taxes is to generate revenue for the state or municipality where the tax is levied. Whether for a state, county, or city, transfer taxes contribute to public services and infrastructure funding. In the Windy City, the Chicago transfer tax is the responsibility of both the buyer and seller. However, this financial burden can fall solely on the seller in some Illinois communities. It can vary depending on your local market. For example, in Aurora, sellers are required to pay a transfer tax levied at a rate of $3 per for $1,000 in the transaction, according to Illinois Realtors. This would mean that on a home that closed at $200,000, a $600 fee would be added to the closing costs. Transfer taxes in Chicago work similarly to many other jurisdictions, incorporating state, city, and county levels. Each layer has its own set of rates and rules. At the state level, Illinois imposes a transfer tax on the sale of real estate. In addition to this, counties can levy their own transfer tax; Cook County, for example, has its own tax for properties changing hands within its borders. Chicago also imposes its own transfer tax. According to Chicago’s Department of Finance, the real estate transfer tax (RETT) is calculated at $5.25 per $500.00 of the transfer price, or fraction thereof, of the real property or the beneficial interest in real property. The buyer is responsible for $3.75, while the seller is responsible for $1.50. Illinois imposes a tax of 50 cents per $500 of the property’s value. According to the state’s Department of Revenue, “Counties may impose a tax of 25 cents per $500 of value on real estate transactions. Home rule municipalities may also impose an additional real estate transfer tax.” In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional. If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect.What are transfer taxes?
Who pays for transfer taxes?
What are the types of transfer taxes?
State transfer taxes
County transfer taxes
Other transfer fees
