Five years ago we were reporting that plans for two duplex condos at 1544 W Henderson St were added to the development deadpool. A little over a year ago, in the above video, Melanie Giglio of Sergio & Banks was showing me around a new home that had been built on the site several years earlier.
The home was listed for $1,830,000 at the time of the video and eventually sold for $1,599,000, as reported in the MLS, and $1,500,000 according to public records.
How can it be that the MLS and the Cook County Recorder’s Office report different selling prices? Was something funny going on?
My take is that something un-funny is going on when the MLS and the Recorder’s office report identical prices – un-funny because the buyer is likely to be over-paying real estate transfer taxes on the sale and contributing to a higher than necessary base for property tax assessments.
It’s been my experience that very few attorneys pay attention to the fact that the state, county and city real property transfer taxes are payable on the sale price of real property. Virtually every home sale includes property that is personal property, e.g. a refrigerator, and the amount of personal property included in a sale can be substantial and is not subject to transfer taxes.
In my days as a developer / seller virtually every buyer’s attorney objected to my reducing the sale price at closing on transfer tax declarations by the amount of personal property included in the sale. Let me restate that: the buyer’s attorney insisted that his client pay more tax at closing and probably more every year thereafter in property taxes. In almost every case I had to have an attorney for Chicago Title explain a basic legal proposition to the buyer’s attorney before he would accept it.
I don’t know the facts in the case of the Henderson sale, but it’s possible that the sale included $99,000 worth of personal property – an amount that could easily be reached if the home were sold furnished.
The current Chicago transfer tax rate is $5.25 per $500 of the sale price, $3.75 of which is the responsibility of the buyer and the balance the responsibility of the seller. Legitimately excluding the personal property from the sale would result in savings of $742.50 in transfer taxes for the buyer and $297 for the seller. In addition, the buyer might see ongoing real estate taxes that would be approximately $1,500 a year lower than if transfer taxes had been paid on the $1,599,000 price.
How was your sale price reported at closing? Did your attorney pay attention to this issue?