It looks like the Chicago real estate transfer tax increase has gone into effect as of April 1 to help bail out the CTA. Why homeowners have to pay for public transportation is beyond me but what the heck. You and I are already paying to bail out everyone else these days so what difference does one more bailout make? I just wish someone would bail me out of something. I would like a government subsidy for my gasoline bill or maybe for my monthly phone bill.
In case you haven’t heard, this tax increase amounts to an additional 0.3% that the seller has to pay. So, to use round numbers, on a $1 MM house that’s an additional $3000. So let’s review the total taxes now involved in buying our theoretical million dollar home:
- State tax paid by Seller = $1000
- County tax paid by Seller = $500
- City tax paid by Seller = $3000
- City tax paid by Buyer = $7500
- Total tax = $12000
As the guy who I bought my first home from used to say, “that’s a lot of jingle”. It’s almost as much as a typical real estate agent might make on the deal. And regardless of who pays the various transfer taxes in the example above it raises the cost of homeownership for all of us because everyone is a buyer and a seller at different points in time.
What’s really surprising about this development is that I just didn’t hear anyone outside the real estate industry complaining about the issue. The ordinance was passed unanimously by the city council without debate so they must not have heard many complaints either. Perhaps people just didn’t focus on it because it’s not a tax they get hit with every day – only when they move, and people often don’t think about moving until they start thinking about moving.
The real estate industry launched a valiant effort to stop this tax but despite their massive clout it looks like they didn’t even slow the process down. I guess you just can’t stand in front of a moving train.