A seller in Chicago believes that paying the Chicago real property transfer tax satisfies all transfer tax obligations on the transaction and that no Illinois state transfer tax is separately owed. Which statement is correct?
Correct Answer
C) The seller is incorrect; the Chicago transfer tax and the Illinois state transfer tax are independent obligations that can both apply to the same transaction.
Illinois imposes a state real estate transfer tax under 35 ILCS 200/31-1 et seq. at a rate of $0.50 per $500 of consideration. Chicago separately imposes its own municipal transfer tax under Chicago Municipal Code § 3-33, currently at $3.75 per $500 (with an additional buyer's tax). These are entirely independent tax obligations — payment of the city tax does not satisfy or offset the state tax. Both can apply to the same deed, making the seller's assumption incorrect.
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Related Topics & Key Terms
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Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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