Buying or selling a condo in the Loop and trying to pin down your bottom line? Transfer taxes can be a surprise if you have not budgeted for them. You want a clear, Chicago-specific explanation so you can estimate net proceeds or cash to close with confidence. This guide walks you through what transfer taxes are, who pays, how to calculate them, and worked examples using common Loop price points. Let’s dive in.
Transfer tax basics
A real estate transfer tax is a tax charged when property ownership changes. It is usually based on the sale price or other consideration listed on the deed. In Chicago, three layers may apply: the State of Illinois, Cook County, and the City of Chicago.
These taxes are separate from other closing charges. Do not confuse transfer taxes with recording fees, title insurance, mortgage recording fees, or lender charges. Those appear as their own line items at closing.
Transfer taxes are typically due when the deed is recorded. The purchase contract decides who pays which taxes, and local custom can influence how costs are split.
Authoritative bodies to confirm current rates and exemptions include the Illinois Department of Revenue, the City of Chicago, and the Cook County Recorder or County Clerk. Your title company or closing attorney can also verify the correct amounts and prepare forms.
Who pays in Chicago
Legally, payment is determined by the contract and reflected on the closing statement. In practice, buyers and sellers in Chicago often negotiate who pays each layer. There is no single rule that applies to every Loop condo. To avoid last-minute surprises, make sure the purchase agreement clearly assigns each portion and ask your title company for an itemized estimate early.
Calculate your taxes
Follow these steps to estimate total transfer taxes for a Loop sale or purchase:
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Confirm the taxable consideration. Start with the contract sale price. Certain adjustments can apply depending on local rules, so ask your title company if any non-cash items affect the taxable amount.
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Compute the Illinois state transfer tax. The confirmed statewide rate is 0.1% of the consideration. That is $0.50 per $500, or $1 per $1,000.
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Add Cook County and City of Chicago taxes. Local rates change. You should verify current rates with the City of Chicago and Cook County before running your numbers.
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Add all parts together. Total transfer tax equals the sum of state, county, and city portions.
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Allocate by contract. Apply the agreed payment split to estimate your net proceeds (seller) or cash to close (buyer).
Confirmed state tax examples
Here is the Illinois state portion only, using common Loop condo price points:
- $300,000 sale: $300,000 × 0.001 = $300
- $600,000 sale: $600,000 × 0.001 = $600
- $1,200,000 sale: $1,200,000 × 0.001 = $1,200
Quick calculator formula
Use this structure once you confirm current county and city rates:
- Total transfer tax = (Sale price × State rate) + (Sale price × County rate) + (Sale price × City rate)
- With the state rate known at 0.001, you only need to plug in the current Cook County and City of Chicago rates.
Worked Loop examples
To show how the math works, here are hypothetical county and city rates. These are for demonstration only. Always verify current rates with the City of Chicago and Cook County before relying on a number in your budget.
- Hypothetical city rate: 0.75% (0.0075)
- Hypothetical county rate: 0.25% (0.0025)
- Confirmed state rate: 0.10% (0.001)
Total tax using hypothetical local rates
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$300,000 sale price
- City (hypothetical): $300,000 × 0.0075 = $2,250
- County (hypothetical): $300,000 × 0.0025 = $750
- State (confirmed): $300,000 × 0.001 = $300
- Hypothetical total: $3,300
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$600,000 sale price
- City (hypothetical): $4,500
- County (hypothetical): $1,500
- State (confirmed): $600
- Hypothetical total: $6,600
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$1,200,000 sale price
- City (hypothetical): $9,000
- County (hypothetical): $3,000
- State (confirmed): $1,200
- Hypothetical total: $13,200
Who pays: three scenarios
Payment is contract-specific. Here are illustrations you can adapt once you confirm current local rates and your negotiated split.
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Scenario A: Seller pays all transfer taxes. Example for a $600,000 sale with the hypothetical totals above:
- Commission (example 5%): $30,000
- Seller-paid transfer taxes: $6,600
- Other seller costs (example): $1,500
- Estimated net proceeds: $600,000 − $30,000 − $6,600 − $1,500 = $561,900
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Scenario B: Buyer pays all transfer taxes. Example buyer with 20% down on $600,000:
- Down payment: $120,000
- Buyer-paid transfer taxes (hypothetical): $6,600
- Lender/other fees (example): $4,000
- Estimated cash to close: $120,000 + $6,600 + $4,000 = $130,600, plus any prorations
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Scenario C: Split by custom or contract. Example for $600,000 where seller pays city and buyer pays state:
- Seller pays city (hypothetical): $4,500
- Buyer pays state (confirmed): $600
- Buyer’s cash to close includes $600; seller’s net proceeds decrease by $4,500
Exemptions to know
Some transfers are exempt from one or more layers of transfer tax. Eligibility and documentation depend on the jurisdiction, and many exemptions require specific affidavits when recording.
Common exemption categories include:
- Transfers between spouses or incident to divorce
- Certain transfers between parent and child
- Transfers to or from government entities or qualifying nonprofits
- Transfers into or out of a revocable living trust when the beneficial owner does not change
- Foreclosure sales, deeds in lieu, and some court-ordered transfers
- Gifts or transfers below certain thresholds where applicable
Chicago and Cook County have their own rules and forms. Ask your title company or closing attorney early to confirm eligibility and prepare the required paperwork. Misstating an exemption can delay recording or lead to a later assessment.
Estimate your bottom line
Use these quick checklists to get to a realistic number before you list or write an offer.
Seller net proceeds checklist
- Start with your contract sale price
- Subtract broker commission (confirm your agreed rate)
- Subtract seller-paid transfer taxes (compute each layer)
- Subtract your mortgage payoff(s)
- Subtract prorated property taxes, unpaid HOA dues or assessments, and closing fees (title, attorney, recording for mortgage release)
- Result is your estimated net proceeds
Buyer cash-to-close checklist
- Down payment amount
- Add buyer-paid transfer taxes
- Add lender charges (origination, points), title insurance premium as negotiated, and recording fees
- Add prepaids and escrows for property taxes and insurance
- Account for prorations on HOA dues and taxes
- Result is your estimated cash to close
Fees not considered transfer taxes
Several closing costs in Chicago appear near the tax lines but are not transfer taxes. Keep them separate so you can compare apples to apples.
- Deed recording fee (county or city clerk)
- Mortgage recording fee (if you finance)
- Title insurance premiums (owner’s and lender’s)
- Lender fees, appraisal, inspection
- Prorated property taxes and HOA dues or assessments
Next steps for Loop buyers and sellers
- Ask for an itemized estimate. Your listing agent or title company can break down state, county, and city transfer taxes by payer so you know the impact.
- Confirm current rates. Local rates and forms can change. Have your title company verify the latest City of Chicago and Cook County requirements.
- Clarify the contract split. Decide who pays each layer and reflect it clearly in the purchase agreement.
- Verify exemptions early. If you might qualify for an exemption, gather affidavits and supporting documents well before closing.
- Review your disclosure early. Buyers should review the Closing Disclosure and sellers the final settlement statement and ask about any transfer tax line items.
When you want a calm, clear path through a Loop transaction, we bring the neighborhood experience and transaction management to keep you informed at every step. If you are planning a sale or purchase, connect with Deborah Ballis Hirt for a tailored estimate and guidance from contract to close.
FAQs
What are transfer taxes in Chicago real estate?
- Transfer taxes are charges due when property ownership changes. In Chicago they may include Illinois state, Cook County, and City of Chicago layers, each based on the sale price.
Who usually pays transfer taxes for Loop condos?
- Payment is negotiable and set in the purchase contract. Local custom varies, so confirm the split in writing and have your title company show it on your estimate.
How do I calculate Illinois state transfer tax?
- Multiply the sale price by 0.001. For example, $600,000 × 0.001 = $600. Then add county and city portions once you confirm those current rates.
Are any Chicago transfers exempt from transfer tax?
- Certain transfers like between spouses, some parent-child transfers, trust moves without a beneficial change, qualifying nonprofits, and court-ordered actions may qualify. Documentation is required.
When are transfer taxes paid in a Chicago closing?
- They are paid at recording of the deed and listed on your Closing Disclosure (buyer) or settlement statement (seller), allocated according to your contract.
