The Ugly Truth About Proposed Real Estate Transfer Tax Hike

"How much is this going to cost me?" That's one of the questions my selling clients ask when it's time to put their places on the market. They know there's a tax involved (there's always a tax involved), they just don't know how much. In Chicago the so-called Real Estate Transfer Tax is the seller's responsibility and it amounts to a cost of $7.50 for every $1,000. In other words, you sell your house for $450,000, you owe a tax of $4,050. Ouch! But wait, there may be more. Unfortunately the geniuses at City Hall want to deepen the pain of home sellers. The City Council votes next week on a proposal supported by Mayor Richard Daley that will increase this burden from $7.50 to $10.50 per $1,000. In other words, sell a home for $450,000 and pay a tax of $5,400 instead of the current surcharge of $4,050. That's an increase of 40%! Double the sale's amount to $900,000 and you've enriched the city government's coffers by $10,800. And this is on top of a combined County and State transaction tax of $1.50 per $1,000. And this is on top of the real estate taxes you've paid twice a year since you originally bought the house that you are now selling. In a January 25th Tribune article 50th Ward Alderman Bernard Stone summed it up by saying...

You've got Congress talking about giving more money away [in a taxpayer rebate to stimulate the economy], and here we are trying to destroy the real estate market, which, if anything, is the machine that keeps the city going... This is absolutely crazy.

I don't know that I've ever agreed with Alderman Stone before. But I do now. Implementing this tax at this time is crazy. Allegedly it's supposed to keep CTA trains running. What it's really doing is infusing roughly $60,000,000 to the Chicago Transit Authority's pension fund while thrusting the Chicago real estate market atop a sinking sandy surface. And by the way, caveat emptor you too buyer! While your pain won't be so severe from the tax bite, you will leave the closing table lighter to the tune of $3.00 per $1,000. With Valentine's Day just around the corner I guess it's the city's way of letting you know that their thinking of you too. How much will it cost you? Click here to find out. Want to voice your opinion to your alderman? Click here.