Closing on a real estate transaction in the State of Illinois involves paying transfer taxes. These taxes are incurred when a title is transferred to the buyer.
Transfer taxes are levied by state, county, and municipal governments. Since transfer taxes vary from area to area, it is wise to consult with a real estate attorney to ensure that all your real estate tax obligations are met.
Diamond Real Estate Law serves clients in McHenry, IL, and surrounding areas. Read on to learn more from our team about transferring house titles.
How much are transfer taxes?
A transfer tax on real estate property is essentially a sales tax. The amount of transfer tax you owe will vary depending on where you live in Illinois. Counties and city governments tax real estate transfers at different rates.
The taxes owed to the state government have been static, so 50¢ is owed for every $500 of the sale price. In McHenry County, every $500 of sale price is also taxed at an additional 25¢. Fortunately, most municipalities in McHenry County do not impose transfer taxes. Outside of McHenry County, however, some municipalities levy transfer taxes as flat fees or based upon the assessed value of the property.
Since municipal transfer taxes can vary throughout the State, it is important to consult with experienced real estate agents and attorneys to help you anticipate closing costs.
Understanding transfer taxes
These taxes are paid at closing. Real estate property cannot be transferred to the buyer until all transfer taxes have been paid.
When it comes to paying State and county transfer taxes, the responsibility falls on the seller. Transfer taxes paid to municipalities can be paid by the buyer or the seller based on the stipulations set forth in their sales contracts and the area in which they reside. In some cities, such as Chicago, both the buyer and seller pay transfer taxes.
Is it possible to have transfer tax exemptions?
If you are selling your property, you must pay transfer taxes. If the transfer of your property is not a sale, or if less than $100 was paid for the property, sellers can file exemptions.
Properties that qualify for exemptions include gifted properties transferred via quitclaim deeds. These types of transfers must include signed exemption statements and some parties may need to file PTAX-203 forms.
Will I need to pay separate fees for inspections?
Some municipalities in Illinois charge fees for inspections. It is best to speak with a real estate lawyer or realtor familiar with your area to learn about whether you will need to pay additional fees. Bear in mind that there are flat-rate fees for filing deeds in McHenry County.
Although buying and selling a home is an exciting time for many people, the lesser-known costs of closing on a property can contribute to stress. Since Illinois levies taxes at the State, county, and sometimes municipal level, consulting with knowledgeable professionals can make the process a lot less confusing.
In addition to working with a reputable real estate agent, many buyers and sellers enlist the help of an experienced attorney. A real estate lawyer can assist with reviewing and drafting real estate contracts, anticipating fees and tax obligations, as well as ensure that your interests are well-represented in the event of titles with defects or issues with disclosures.
Diamond Real Estate Law is here to help
If you are buying or selling property in McHenry County (or the surrounding area), we invite you to call Diamond Real Estate Law to schedule a consultation with an attorney. Our practice places a high priority on client satisfaction and open communication. You can reach us at (773) 217-9623.
DISCLAIMER: Any information contained herein is solely for informational purposes. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, [I][We] always urge you to contact a local attorney for advice pertaining to your specific legal needs.