Real Estate Transfer Tax Burden May Shift

By Kevin Robinson in News on Mar 11, 2008 4:00PM

With the spate of recent tax increases in the region, Chicago's been trying to find a way to ease the pain. Earlier this month Mayor Daley announced that he had persuaded the Cook County Board of Review to reopen the appeals process for a special two-week period, so that homeowners who feel that their property tax has been assessed too high as a result of the downturn in the housing market could appeal. And yesterday the city council's Finance Committee backed a proposal by Ald. Patrick O’Connor (40th), which would shift the burden of the 40 percent transfer tax increase onto sellers of homes.

The real estate transfer tax increase, passed last month as part of the CTA bail-out plan, would shift from the buyer of a home to the seller. The current tax, $7.50 per $1,000 of the sale price, will continue to be paid by the buyer. But the tax hike, $3 per $1,000, which takes effect April 1, will be shouldered by the seller. O'Connor said that he wanted to split the charges equally between the seller and the buyer but that state law prohibits such a move. “It’s really just a matter of trying not to have the full burden of this increase in taxes continue to be on a purchaser who is buying property in the city. It just seemed to be a more fair way to try and divide this tax. By making the CTA [portion] all on the seller and the city's all on the purchaser, at least there's a clear delineation," O'Connor told the Sun-Times.

Of course, The Home Builders Association of Greater Chicago opposes the move. "By shifting that tax over on the seller's side, you are stripping them of equity. You are taking money out of the pockets of people who have hard-earned home equity that has been built up over time,” Paul Colgan said, speaking on behalf of the Association. Ald. Bernie Stone (50th) wasn't too impressed, however. “Over the last at least ten years, prices have appreciated as much as 100 to 200 percent. So, I’m not gonna cry for the sellers,” Stone said.

Image via Pantagrapher