Do Your Property Transfer Taxes Stink?

Here in Chicago there is a big stink over raising the property transfer taxes to pay for the ailing transit system.

Currently here in Chicago, buyers pay $7.50/1000 and sellers pay $1.50/1000 (some of which is state, county and city).

A recent proposal was to raise the buyers fee by $3/1000 to $10.50/1000 which in my argument would create a disincentive (if that's a word) towards buyers ESPECIALLY in this market where we need all the stimulation we can get (economic and otherwise).

Anyways, it just passed yesterday that the transfer increase burden would indeed be placed on the sellers so our new structure is as follows with this example:

$7.50/1000 for buyers
$4.50/1000 for sellers
On a $300,000 property purchase that would mean
$2250 for buyers
$1350 for sellers

How does it play out in YOUR neck of the woods?

Chicago Transfer Taxes May Move Burden to Sellers

Chicago Transfer Taxes May Move Burden to Sellers

Well it seems the City Council is getting the message that by increasing the transfer tax on buyers by 40% will act as a disincentive to make home purchases in the city (not to mention the increased sales tax, but thats another topic).

In a blog post earlier (several actually), I complained and vented that this move would place an unfair burden in buyers and that the sellers would be better suited in most cases to absorb the tax since most end up with equity from the sale which can be used to pay the tax (as opposed to having to save for it).

Well Finance Committee leader Patrick O'Connor has asked that the sellers absorb that tax much to the chagrin of lobbyists from the Home Builders Association of Greater Chicago--most of their associates are builders who would be required to absorb the cost as a part of doing business, so they are obviously against it).

Sellers are currently paying only $1.50/1000 of sale price and buyers are paying $7,50/1000. If this new proposal is accepted, sellers would pay $4.50/1000 and buyers would still be paying the $7.50/1000.

Glad to hear someone was reading this blog :) Actually this makes fiscal sense and should not prohibit buyers (especially first time buyers who are saving every penny to buy a home) from making their home purchase and getting this economy (micro and macro) back on its feet.

Non-Referendum Increase in Transfer Taxes Proposed

The Illinois legislature is still preparing to vote on an increase to the transfer tax to pay for mass transit. For the average police officer, firefighter, health care worker and teacher this increase would be over $900 on the average priced home. This will delay some in purchasing a home and will contribute to slowing down the market.. This bill would also authorize the Chicago City Council to increase its real estate transfer tax (currently $7.50 per $1,000 paid by the buyer) WITHOUT A REFERENDUM but merely by passage of an ordinance. The ordinance for the "supplemental" real estate transfer tax increase of up to $3 per $1,000 would be for the sole purpose of providing financial assistance to the CTA for funds for debt service for the pension bond. The city would have to enter into an intergovernmental agreement with the CTA-the term of the intergovernmental agreement is to be "for a term expiring no earlier than the final maturity of bonds or notes that it proposes to issue" for pension bonds - stated to be the year 2039!

An increase of $3 per $1,000 represents a whopping 40% TAX INCREASE in the City's real estate transfer tax imposed on the city's property owners.

Chicago REALTORS® have long understood the linkage between transportation policy and housing. Chicago REALTORS® want to build Chicago and make it stronger. Chicago REALTORS® work to encourage people to live, work and play in Chicago. We oppose all Real Estate Transfer Tax increases that inhibit this City's growth.

CONTACT MAYOR DALEY TODAY AND ASK HIM TO OPPOSE THE PROPOSED INCREASE IN THE CHICAGO REAL ESTATE TRANSFER TAX
AT 312-744-3300

CALL YOUR ALDERMAN AT THEIR LOCAL WARD OFFICE TODAY AND TELL THEM
NO INCREASE IN THE CHICAGO REAL ESTATE TRANSFER TAX FOR TRANSIT!