With a citywide vote on Mayor Brandon Johnson’s plan to raise real estate transfer taxes on deals for more than $1 million less than two months away, what’s at stake for Chicago homebuyers?
It turns out it’s about $15 million.
If the policy, called Bring Chicago Home, was in place last year, that’s how much it would have cost residential buyers, according to research by Crain’s. That’s about one-ninth of the amount the transfer-tax — a one-time fee charged upon purchasing a property — is expected to raise under the referendum, with commercial transactions shouldering most of the burden.
Johnson’s plan for higher transfer taxes on real estate purchases over $1 million would disproportionately affect commercial real estate, while lowering the fee for most home-buyers. The transfer tax for buyers of a $310,000 home, for example, would drop from $2,325 to $1,862, saving a little less than $500.
On the other hand, a home that sold for $1.71 million last year paid a transfer tax of less than $13,000. Under the change, that tax would be about $22,000.
Ken Griffin’s $11.2 million Park Tower condo sale from last year — the priciest sale in the city — would’ve added $223,000 in transfer taxes to the $84,000 that the buyers paid at the current rate, the outlet reported.
The difference is intended to fund anti-homelessness and affordable housing initiatives in Chicago, if the referendum is approved.
The current transfer tax rate is 0.75 percent, regardless of price. Bring Chicago Home would restructure it into three tiers. It would jump to 2 percent for sales between $1 million and $1.5 million, while rising to 3 percent for transactions greater than $1.5 million. The rate would drop to 0.6 percent for property trades under $1 million.
While some properties valued between $1 million and $1.5 million will face an increase, the tax is incremental. The first $1 million of the price is taxed at the lowest rate, 0.6 percent, and the remainder is taxed at 2 percent. So there’s a price range above $1 million where transfer taxes actually decrease. A condo that traded for $1.12 million in October, for example, was dinged with $8,400 in transfer taxes. That amount would be the same under Bring Chicago Home.
—Quinn Donoghue
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