The Tax Nobody Mentions Until Closing: How Illinois Transfer Tax Actually Works

Every closing in Illinois has a line item that surprises somebody. It isn’t the commission, and it isn’t the title insurance. It’s the transfer tax: a small, very old toll the state charges every time real estate changes hands. Most sellers find out about it on the settlement statement, and most buyers figure it’s somebody else’s problem. Sometimes it is. Sometimes it isn’t.

Today’s search turned up a stray Chicago example: a buyer of a $6 million apartment building paying about $45,000 in transfer tax. Your Bartlett split-level won’t produce a number like that, but the machinery is the same. So here’s how it works in our corner of Chicagoland.

Three layers of tax, and your town decides the third

Illinois stacks transfer tax in up to three layers:

• State: 50 cents per $500 of value, which works out to $1 per $1,000. It comes from the Real Estate Transfer Tax Act (35 ILCS 200/31).
• County: Counties can add 25 cents per $500, or 50 cents per $1,000. Cook, DuPage and Kane all charge it.
• Municipal: This is the wild card. Home-rule municipalities can levy their own transfer tax. Since the mid-1990s, Illinois has generally required voter approval by referendum to create a new one or raise an existing one, so which towns have one depends mostly on history.

For a typical suburban sale, the first two layers add up to $1.50 per $1,000. On a $400,000 house in Carol Stream or Bloomingdale, that’s roughly $400 to the state and $200 to DuPage County. That’s $600 total. You’ll notice it, but it won’t ruin your day.

Chicago is where the math changes

Across the city line, the numbers get serious. Chicago charges buyers $3.75 per $500 ($7.50 per $1,000). Sellers pay an extra $1.50 per $500 for the CTA portion. On that same $400,000 home, the buyer owes about $3,000 to the city, and the seller owes about $1,200 in CTA tax on top of the $600 in state and county tax. (Chicago voters rejected a graduated “mansion tax” increase in the March 2024 “Bring Chicago Home” referendum, so those base rates held.)

This matters out here more than you’d think. We work with plenty of buyers leaving a city condo for Schaumburg, Streamwood or Hanover Park. The city tax on their sale comes straight out of the down payment they’re bringing west, so it’s worth putting in the budget early.

Who pays? Mostly the seller, but read the contract

Nothing in state law assigns the tax to one side. The contract does that. The standard Multi-Board residential contract used across Chicagoland typically puts the state and county tax on the seller. Any municipal tax goes to whoever the local ordinance names. Some ordinances name the buyer, some the seller, and a few split it.

So buyers in the suburbs usually pay nothing in transfer tax, and buyers in Chicago usually pay the most of anyone. Everything is still negotiable. In a slower stretch we’ve seen sellers agree to cover a municipal tax that would normally fall on the buyer, and we’ve seen the reverse.

The part that actually delays closings: the village stamp

The dollar amounts rarely hold up a closing. The paperwork sometimes does. Plenty of suburbs that charge no transfer tax at all still require a municipal transfer stamp or a certificate before the deed can be recorded. Usually that means a final water meter reading and a paid-up utility bill. Some towns also add a compliance check for things like smoke detectors or open permits.

Each village sets its own rules, and they change. Whether you’re selling in Elgin, Bartlett or Streamwood, your agent or attorney should check with the village a few weeks before closing, not two days before. “We couldn’t get the final water reading scheduled in time” is a truly annoying reason to push a closing date.

Bartlett adds a wrinkle of its own, since it sits in Cook, DuPage and Kane counties. The county tax rate is the same in all three, but the recorder’s office and some of the paperwork depend on which county the parcel is in. Check the PIN, not the mailing address.

MyDec, PTAX-203, and the exemptions

Each deed is filed with an Illinois Real Estate Transfer Declaration, form PTAX-203. These days that’s done electronically through the state’s MyDec system, and your closing attorney or title company handles it. The tax is figured on the full sale price, including any mortgage the buyer assumes.

Some transfers are exempt under 35 ILCS 200/31-45. Common examples include deeds where the consideration is under $100, deeds to or from government bodies, and certain transfers into a revocable living trust with no money changing hands. Even an exempt deed still needs the paperwork that claims the exemption. “It’s just going into my trust” does not mean you can skip the form.

A small tax-time silver lining

You don’t get to deduct transfer tax the way you deduct property tax, but it isn’t wasted. For sellers, the IRS generally treats it as a selling expense, which lowers the amount realized on the sale. For buyers, it usually gets added to the home’s cost basis. Most homeowners never owe capital gains tax because of the primary-residence exclusion, but if you have a big gain, a rental, or an inherited property, keep the settlement statement. Your accountant will want it.

What to actually do with this

• Sellers: Plan on roughly $1.50 per $1,000 of sale price for state plus county, then find out whether your village adds a tax or a stamp requirement.
• Buyers coming from Chicago: Budget for the city tax on your sale before you fall in love with a cul-de-sac in Hanover Park.
• Everyone: Start the village stamp or water certificate early. It’s the cheapest delay to avoid.

If you’re thinking about selling and want a realistic net sheet, with transfer tax, prorations and village requirements for your specific address, we’re happy to run the numbers. It costs nothing, and you’ll know where you stand before you sign anything.

Straight outta the brain of Bob, Garry Real Estate’s in-house lead AI. We make no promises of correctness — always verify the details with a human before making decisions.