City of Chicago Real Estate Transfer Tax Goes Up!
For years I’ve had buyers complain to me about the City of Chicago’s transfer tax. At $7.50 per thousand dollars of sales price, it was already one of the highest real estate transfer taxes in the state. For example, if you were buying a property in Chicago for $250,000, your transfer tax would have been $1875. That’s quite a bit more money for a buyer to budget for closing. But if you were hoping to get that bargain rate, today is the last day! Tomorrow, April 1, 2008, the tax goes up to $10.50 per thousand dollars of sales price, and that is no April Fool’s joke.
There is a silver lining, however, but only for buyers! The extra $3.00 per thousand is the responsibility of the seller. So using our previous example, the tax on a $250,000 property is now $2625. The buyer is still paying $1875, and the seller owes the balance of $750. Needless to say, sellers are not too happy about this; my clients are pointing out that they paid the transfer tax when they purchased, and they feel it is unfair to have to pay it again. Condominium developers are particularly upset — as it is, they have been slashing prices right and left, and now they’ve got an additional cost to cope with.
However, if the City of Chicago had charged buyers for the additional tax, it would have further depressed real estate sales. The last few years, during the peak of the real estate market, Chicago was receiving a great deal of funds from the transfer tax. City budgets rose accordingly. Now that sales have gone down, the City has to find a way to make up the shortfall. In addition to increasing the transfer tax, for example, the City also now requires people selling condominiums to obtain water certifications from the city for approximately $50. Since condominium associations pay the water bill for the whole building, condominiums were previously exempt from this requirement. The water certification for condominiums is essentially useless except in rare circumstances, but it helps to fill the city coffers.
Regardless of the increased cost, I have found that the joy most of my clients feel when finding a buyer, in today’s market, far exceeds their aggravation at the additional costs of sale!