The State of Illinois and Cook County impose transfer taxes on the sale of real estate, as do a number of municipalities, including the City of Chicago.
The Chicago transfer tax is $3.75 per $500 of the transfer, and it’s the responsibility of the buyer – although, like everything else in a real estate transaction, who actually pays it is negotiable. Chicago also imposes a $1.50 per $500 transfer tax to provide financial assistance to the CTA, and that tax is the seller’s responsibility.
Revenue from real estate transfer taxes is a good proxy for the health of the real estate market – a strong market results in increased revenues and revenues plummet in a weak market.
Chicago’s 2012 Proposed Budget (PDF) projects total transaction tax revenues of $73.4 million, below actual 2010 revenues of $81.3 million and 2011 year-end estimates of $78.2 million.
Real estate transfer tax revenues were $242.3M in 2006, $205.8M in 2007, $119.5M in 2008 and $61.9M in 2009.
In brief, the City of Chicago isn’t budgeting for much of a rebound in the real estate market in 2012. Wilmette is also budgeting for a slow year.
Not every municipality imposes a tax on the transfer of real estate, but if yours does you can examine its budget for an informed guess on next year’s real estate market velocity.
The 2006 and 2007 revenues would have been much higher had the CTA Seller’s transfer tax been in place. That was a tough pill to swallow when passed in the City Council in early 2008 when sellers were in trouble…then the crash.
I guess it’s better to “project” low numbers in a budget and hope they come out higher, but with the increasing numbers of large apartment buildings changing hands I wonder if these numbers are low.
I don’t expect any massive turnaround in the SFH or condo markets in “da city” in the next year, but apartment sellers also pay the tax.
IrishPirate,
This year’s revenue numbers were pumped up by a record volume of large apartment building sales. Will next year’s numbers top the record? Stay tuned.
Gotta love those low apartment prices in Uptown!