Chicago Transfer Tax Increase To Hurt Buyers and Sellers

So they voted more than a week ago to increase the City of Chicago Transfer Tax from $7.50/$1,000 spent to $10.50/$1,000. An increase of 40%. The increase goes into effect for anything that closes after April 1st. I didn’t write about this immediately because I wanted to do some reading and talk to some people and hear why? I emailed and called my Alderman a few days before the vote to let him know I was against the increase. We had a nice back and forth via email as he informed me he did vote to increase but “did not take the vote lightly.” That’s a relief. I’m glad they didn’t take it lightly. I’ve come to find out the main reason for the increase was to bail out the CTA (Chicago Transit Authority.) I was told that the CTA was vital to help the economy along and maintain some sort of order. I agree. However, why increase the transfer tax? The current state of the Real Estate market isn’t bad enough? My thought is there has to be another way to find the money.

This increase will put Chicago’s Transfer Tax at one of the highest such taxes in the country. That doesn’t sound good no matter how you spin it. On average they say most condo buyers will be hit with an additional $825 and and additional $732 for single family homes. In my opinion and according to most I’ve spoken with “first time home buyers” are going to be hit the hardest. Closing costs in the City of Chicago are already expensive at $7.50/$1,000 spent. First time home buyers are key to turning around the housing market. They don’t have to go through the selling process in order to buy making them ideal to move current inventory. Absorption rates for Chicago are roughly 11 months and I just learned a “healthy” number is closer to 5 months. What do we do? Make our voices heard. Just because the vote passed doesn’t mean we can’t still let our Alderman know exactly how we feel. After all, they are representing US.

How much will the new transfer tax cost you? Here is the easy math:
For every $100,000 you spend in buying a home in the City of Chicago you will be hit with $1,050 of this tax. It used to be $750 per $100,000. An increase of $300 for every $100,000. If you purchase a $500,000 home you’re increase with the new tax is going to be $1,500. That’s just the increase. The actual tax will be $5,250. Add that to your other closing costs and it all starts to add up. Never too late to speak out and speak up.