4.4 Taxes & Transfer Requirements
Key Takeaways
- Illinois state transfer tax is $0.50 per $500 of consideration ($1 per $1,000); counties add $0.25 per $500.
- Chicago's transfer tax totals $5.25 per $500 — $3.75 (buyer) plus a $1.50 CTA portion (seller).
- Illinois property taxes are paid in arrears, which drives a seller credit to the buyer at closing.
- A PTAX-203 Real Estate Transfer Declaration must accompany most deeds presented for recording.
- Common exemptions from the declaration include certain family, government, and nominal-consideration transfers.
Illinois real estate transfer tax
A transfer tax is imposed on the value ("consideration") changing hands when a deed is recorded. Illinois stacks up to three layers: state, county, and municipal.
| Layer | Rate | Usual payer |
|---|---|---|
| State | $0.50 per $500 ($1 / $1,000) | Seller |
| County | $0.25 per $500 ($0.50 / $1,000) | Seller |
| Municipal | Varies by home-rule city | Varies |
State + county worked examples
| Sale price | State ($0.50/$500) | County ($0.25/$500) |
|---|---|---|
| $200,000 | $200 | $100 |
| $350,000 | $350 | $175 |
| $500,000 | $500 | $250 |
To compute the state tax, divide the price by 500 and multiply by $0.50: $250,000 / 500 = 500 units x $0.50 = $250.
Chicago is the big exception
| Chicago component | Rate | Payer |
|---|---|---|
| City Real Property Transfer Tax | $3.75 per $500 | Buyer |
| CTA (transit) portion | $1.50 per $500 | Seller |
| Combined Chicago | $5.25 per $500 (1.05%) | Split |
Note: In most of Illinois the seller pays transfer tax, but Chicago shifts the larger $3.75 city portion to the buyer. The 2024 "Bring Chicago Home" graduated-rate ballot measure failed, so the flat split still applies. On a $400,000 Chicago sale the buyer owes $3,000 (city) and the seller owes $1,200 (CTA), on top of state and Cook County tax.
Stacking the layers — full Cook County / Chicago example
On a $500,000 Chicago sale, the transfer taxes stack:
| Layer | Rate | Amount | Payer |
|---|---|---|---|
| State | $0.50/$500 | $500 | Seller |
| Cook County | $0.25/$500 | $250 | Seller |
| Chicago city | $3.75/$500 | $3,750 | Buyer |
| CTA portion | $1.50/$500 | $1,500 | Seller |
Seller total: $2,250; buyer total: $3,750. Always work the layers separately and assign each to the correct party — the exam rewards knowing that the buyer carries the heavy city portion in Chicago while sellers carry it nearly everywhere else.
Property taxes are paid in ARREARS
Illinois assesses on a January 1 lien date and bills the tax the following year in two installments — so owners always pay for the prior year. Because the seller occupied the property during the period that will be billed later, the seller credits the buyer at closing for the seller's share.
| Concept | Illinois rule |
|---|---|
| Payment timing | In arrears (prior year) |
| Lien date | January 1 |
| Installments | Two per year |
| Closing effect | Seller credits buyer for unpaid share |
Proration worked example
Annual tax is $7,300 ($20/day). A sale closes on day 120 of the year. The seller owned 120 days, so the seller owes 120 x $20 = $2,400, given to the buyer as a credit because the bill has not yet been paid. The buyer later pays the full bill but was reimbursed for the seller's portion.
Homeowner relief exemptions
| Exemption | Who |
|---|---|
| General Homestead | Owner-occupants |
| Senior Citizens Homestead | Age 65+ |
| Senior Assessment Freeze | Income-limited seniors |
| Persons with Disabilities | Qualifying owners |
| Disabled Veterans | Service-connected, tiered relief |
PTAX-203 transfer declaration & recording
Most deeds cannot be recorded without a completed PTAX-203 Real Estate Transfer Declaration, which reports the sale price, parties, and property data used to verify transfer tax.
| Recording requirement | Detail |
|---|---|
| PTAX-203 declaration | Required for most transfers |
| Transfer-tax stamps | State/county (and city) tax paid |
| Proper deed form | Legible, correct legal description |
| Recording fee | Paid to the county recorder |
Common declaration exemptions
| Exempt transfer | Note |
|---|---|
| Nominal/no consideration (<= $100) | Many gift deeds |
| Government to/from | Public bodies |
| Court-ordered | Divorce, foreclosure deeds |
| Certain family / entity-restructure transfers | Statute-specified |
Trap: "Exempt from the declaration" is not the same as "exempt from all tax" — read the question carefully. A deed reciting only nominal consideration may still require a stated exemption code on the document.
Two installments and the assessment cycle
Most Illinois counties bill property tax in two installments; Cook County's first installment is a fixed percentage (historically 55%) of the prior year's total, with the second installment reconciling the actual assessed value. Reassessment happens on a multi-year cycle (Cook County reassesses each township roughly every three years). Because billing lags assessment, a buyer in a reassessment year may see the tax jump after closing — a disclosure and proration concern a sharp licensee raises early.
Quick proration drill
| Step | Action |
|---|---|
| 1 | Find the annual tax (use prior year if current bill unissued) |
| 2 | Divide by 365 for a daily rate |
| 3 | Multiply by the seller's days of ownership in the period |
| 4 | Credit that amount to the buyer at closing |
Because taxes are paid in arrears, the seller's accrued-but-unbilled share is always a credit to the buyer, never the reverse — reversing the direction is the single most common proration error.
On a $400,000 home sold in the City of Chicago, who pays the $3.75-per-$500 city transfer tax portion, and how much is it?
Because Illinois property taxes are paid in arrears, how is the tax typically handled at a closing?
What is the Illinois STATE transfer tax rate on the consideration in a deed?
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