Chicago Real Estate Blog

Real Estate Transfer Tax Increase Could Be Transferred to Sellers

In early February, City Council approved a 40% real estate transfer tax increase that raised the amount Chicago buyers would pay on their new home from $7.50 per $1,000 to $10.50 per $1,000 of the purchase price. That means a $350,000 property would require the buyer to pay another $1,050 in taxes once the new initiative goes into effect on April 1st. That is, until the City Council Finance Committee decided this week to go forward with a proposal that would make the home seller responsible for the additional $3 per $1,000, instead of tacking it on to what the buyer already pays in transfer taxes.

The tax increase was instigated as a solution to Chicago Transit Authority (CTA) money problems which threatened to shut down public transportation routes, reduce the number of buses on the road, and inflate fares. The City anticipates an annual income from the transfer tax of $100 million, which will be used for CTA health care and pension programs.

However, some city aldermen feel it is unfair to put the entire tax burden on buyers, who already pay $7.50 for every $1,000 they spend on a new home purchase. Alderman Patrick J. O’Connor of the 40th Ward is the driving force behind the proposal to shift some of the cost over to sellers. According to articles in the Tribune and Sun-Times over the past couple days, O’Connor says he would like to see taxes more equally distributed between real estate buyers and sellers. In fact, his original intention was to split the taxes down the middle, but that goes against state law.

Even though the Finance Committee has already voted in favor of O’Connor’s plan, the full council stills needs to make a decision on the transfer tax modification. According to Tribune reports, they will likely meet in the later half of the week to finalize the verdict.

Posted at 09:11AM Mar 12, 2008 by Spencer Mason in General  |  Comments[0]