and Other Things You Need to Know Before Selling Your Home

If you’ve bought and sold pretty much anything, you are familiar with the idea of sales tax. Basically, transactions between private individuals or companies come with a small percentage of the sales price owed to the government. In the case of real estate sales, a small percentage isn’t due to just one government body -- it’s owed to three. In this blog post, we dive into the details of the transfer tax associated with real estate deals in Chicago. While there are transfer taxes due pretty much anywhere real estate is bought and sold, the exact amounts are specific to the property’s location.

 If you are planning to sell your home, don’t forget about transfer taxes.

We’ve written before about the costs associated with selling your home. In a real estate transaction there are numerous costs associated with bringing a home to market, negotiating an offer, and closing the sale. It is essential that a potential home seller is aware of and plans for these potential costs before putting a home on the market. Often, certain of these costs are traditionally paid by the seller and others are typically the responsibility of the buyer. However, almost all costs are part of the negotiating process.

The Three Taxes

 Transfer taxes (sometimes also called conveyance fees or transfer stamps) are the amounts owed to the government when real estate title changes hands from one owner to another. Traditionally, these transfer fees are the responsibility of the seller, but this depends on the municipality where the property is located. In Chicago, as we will cover shortly, the fee is actually split between the buyer and the seller.

 The three governments that collect transfer taxes in each Chicago home sale are the State of Illinois, Cook County, and the City of Chicago. However, regardless of where a real estate transaction takes place, there will likely be a local, county, and state tax.

State of Illinois

Amount:                       $1.00 per every $1,000.00 of Sale Price

Responsible Party:         Seller (unless negotiated otherwise)

Where to Purchase:       Buy transfer stamp at county building

Cook County

Amount:                       $0.50 per every $1,000.00 of Sale Price

Responsible Party:         Seller (unless negotiated otherwise)

Where to Purchase:       Buy transfer stamp at county building

City of Chicago

Amount:                        $3.00 per every $1,000.00 of Sale Price

Responsible Party:         Seller (the buyer is responsible for a different city transfer tax at $7.50 per $1,000.00),

Where to Purchase:       Buy transfer stamp at City Hall

What Happens if You Fail to Pay the Transfer Tax?

 WIf you use Alexis Hart McDowell as your attorney or a title company, this is not something you have to be concerned about at all. Essentially, a title company will not let you close on a property without the correct amount of transfer taxes being paid. This is not a conern for any of my clients as it is automatically taken care of.

If you are working without an attorney, and fail to pay the transfer taxes, then Cook County Recorder of deeds will not record the deed because the transfer stamps are not present (they are affixed to the deed). This means that there would be no official record of your sale. Secondly, there are fines associated with a failure to pay this tax. In general, these fines range from $50 to $300 for a first offense. For repeated offenses, there is a possibility of jail time.

What Else Do You Need to Know?

Depending on the complexity of your home sale, there may be a lot more you need to know. However, you can avoid potential sticky situations by making sure that you are represented by Alexis Hart McDowell, Esq., an experienced and dedicated real estate attorney. She will take the pressure off of you throughout the entire home selling process by helping you avoid legal pitfalls and by handling the complex logistics of transferring title. From negotiations to legal compliance to making sure all taxes are paid, working with Enterprise Esquire is the smart way to go. We may even be able to save you money by notifying you of any exemptions or refunds for which you may qualify.

At Enterprise Esquire, our experienced real estate attorney has been involved in legal representation and real estate transactions for over 15 years. Click here to get on the schedule to chat with Alexis Hart McDowell, Esq.