The Chicago transfer tax is a city tax on real estate sales, charged at a combined base rate of $5.25 for every $500 of the sale price, with higher graduated rates on portions above $1,000,000. Both sides of the deal owe a share: the buyer pays $3.75 per $500 and the seller pays $1.50 per $500. The tax must be paid before the Cook County Recorder of Deeds will record the deed.
The Rates
The tax has two pieces. The City portion is $3.75 per $500 of the transfer price and funds general city operations. The CTA portion adds $1.50 per $500 and goes to the Chicago Transit Authority. Combined, they equal $5.25 per $500, or roughly 1.05% of the sale price.1American Legal Publishing Corporation. Municipal Code of Chicago – 3-33-030 Tax Imposed
For sales above $1,000,000, the City portion is graduated. On the slice of the price between $1,000,000 and $1,500,000, the City portion rises to $5.25 per $500. On any amount above $1,500,000, it climbs to $10.50 per $500. The $1.50 CTA piece stays flat across the entire price no matter how high the sale.1American Legal Publishing Corporation. Municipal Code of Chicago – 3-33-030 Tax Imposed
The tax runs on each $500 increment or fraction of one, so a $300,250 sale is taxed on 601 units of $500. Most Chicago residential sales fall under the $1,000,000 threshold, so the flat $5.25 per $500 applies to the whole price.
Who Pays
Chicago splits the bill by law. The buyer owes the $3.75 City portion; the seller owes the $1.50 CTA portion.2City of Chicago. Real Property Transfer Tax On a $400,000 sale, that comes out to $3,000 for the buyer and $1,200 for the seller.
Parties sometimes agree in the purchase contract that one side will cover both portions. That private arrangement is enforceable between them, but the city still holds each party legally responsible for its own designated share. If a seller promised to pay the buyer’s portion and then doesn’t, the city will still pursue the buyer for the $3.75 share.2City of Chicago. Real Property Transfer Tax
Other Transfer Taxes at the Same Closing
Chicago’s tax is not the only transfer tax on a city sale. Illinois adds a state transfer tax of $0.50 per $500, and Cook County adds another $0.25 per $500. Both are customarily paid by the seller, though that is negotiable.
On a $400,000 Chicago home, the transfer tax stack looks like this:
- Chicago City portion (buyer): $3,000
- Chicago CTA portion (seller): $1,200
- Illinois state transfer tax (seller): $400
- Cook County transfer tax (seller): $200
- Total transfer taxes: $4,800
Sellers are often surprised to find themselves owing three separate transfer taxes. Any realistic closing estimate needs to account for all of them.
Exemptions
Not every deed triggers the tax. Chicago Municipal Code Section 3-33-060 lists specific exempt categories, including:3American Legal Publishing. Chicago Municipal Code 3-33-060 – Exempt Transfers
- Deeds where the grantor is the United States, Illinois, or a political subdivision or municipality
- Transfers between a parent and child or between spouses, if the actual consideration is less than $100
- Deeds from an executor or administrator to an heir or legatee
- Transfers from a trust or trustee to a beneficiary for no consideration
- Deeds that solely secure a debt or serve as collateral for a loan
- Transfers connected to a reorganization under Section 368 of the Internal Revenue Code, or to a newly formed corporation in exchange for controlling stock
- Transfers made for no consideration in connection with forming or dissolving a partnership or LLC
- Deeds issued by a sheriff or judicial officer pursuant to a foreclosure or court order
The family transfer exemption catches people most often. A parent deeding a home to a child for nothing qualifies, but if the child assumes a $150,000 mortgage in the process, that assumed debt counts as consideration and the exemption is gone. The under-$100 ceiling is strict.3American Legal Publishing. Chicago Municipal Code 3-33-060 – Exempt Transfers
To claim any exemption, you have to describe the supporting facts on the transfer declaration and attach documentation. The city’s position is that no transfer is exempt unless the declaration and its supporting documents prove it qualifies.2City of Chicago. Real Property Transfer Tax Claiming one you don’t qualify for can trigger an audit and penalties.
Filing and Paying
Since January 1, 2016, all Chicago transfer tax declarations must be filed online through the MyDec system at mytax.illinois.gov. The city no longer accepts paper declarations by mail, so older guides referencing Form 75-L are out of date.4City of Chicago. MyDec – Real Property Transfer Tax
MyDec asks for the legal description as it appears on the current deed, the Property Index Number (P.I.N.) that identifies the parcel in the Cook County tax system, and the full actual consideration, which includes any assumed debt. The system checks the P.I.N. against county assessor data on submission and flags typos immediately. If you’re claiming an exemption, you select the appropriate exemption code and attach the supporting documents.4City of Chicago. MyDec – Real Property Transfer Tax
Most closings handle the actual purchase of transfer tax stamps through a title company that is registered and authorized to print them. You can also buy stamps directly from the Department of Finance by certified check or money order.4City of Chicago. MyDec – Real Property Transfer Tax Without the stamps, the Cook County Recorder of Deeds will not record the deed.
The Full Payment Certificate Prerequisite
Before the city issues transfer tax stamps, the property needs a Full Payment Certificate showing that all water and sewer charges are paid in full. This has nothing to do with the transfer tax itself, but skipping it derails plenty of Chicago closings.5City of Chicago. Full Payment Certificates
The certificate application fee is $50, waived if the transfer is exempt and the application is marked accordingly. Request the certificate well ahead of closing, because it requires a final water meter reading and billing reconciliation. Last-minute requests are one of the more common causes of Chicago closing delays.5City of Chicago. Full Payment Certificates
Penalties for Late or Missing Payments
Skipping the transfer tax is expensive. If you don’t file a declaration before the Department of Finance issues an audit or investigation notice, the penalty equals 100% of the tax owed. The city effectively doubles the bill for the failure to file.6American Legal Publishing Corporation. Chicago Municipal Code 3-33-110 – Penalties
On top of that, the city can add a separate 25% negligence or willfulness penalty under its general tax provisions if it decides the failure was intentional or careless. Interest also runs on any unpaid tax from the original due date.7City of Chicago. Chicago Real Property Transfer Tax Informational Bulletin Someone who owed $5,250 in transfer tax on a $500,000 sale could face another $5,250 in failure-to-file penalties, plus $1,312.50 in negligence penalties, plus interest. File and pay before closing, not after.