Understanding Des Plaines’s Transfer Tax: A Quick Guide
- Published on
- 4 min read
-
Joseph Gordon EditorClose
Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
When selling your home in Des Plaines, knowing how transfer taxes work is important. Transfer taxes are fees levied by local or state authorities whenever property ownership changes, and are usually part of your closing cost considerations.
This guide will explain how the Des Plaines transfer tax works: who pays for what, how much it is, and what exemptions you might qualify for.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
What are transfer taxes?
Real estate transfer taxes are fees charged by state or local governments when property ownership is transferred from one individual to another.
According to the Federal Trade Commission, these taxes are due when the title of a property, essentially the document confirming legal ownership, is officially transferred to a new owner.
The amount owed in transfer taxes can vary widely based on the property’s location, as different states, counties, and cities establish their own rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects.
Who pays for transfer taxes?
Sellers are responsible for paying transfer taxes on real estate transactions in Des Plaines.
What are the types of transfer taxes?
Transfer taxes can differ based on local regulations but are generally categorized into three types: state, city, and county. Here’s a brief overview of how this works in Des Plaines.
State transfer taxes
In Illinois, a documentary transfer tax of $0.50 per $500 of the property’s value is applied. Depending on your specific location within Illinois, additional transfer taxes may apply. For example, Chicago has its own transfer tax guidelines, in addition to the state’s guidelines.
County transfer taxes
According to the state’s Department of Revenue, “Counties may impose a tax of $0.25 per $500 of value on real estate transactions. Home rule municipalities may also impose an additional real estate transfer tax.”
City transfer taxes
Des Plaines imposes a transfer tax of $2.00 per $1,000 of the selling price of a property, in addition to the state’s transfer tax fees.
Are transfer taxes deductible?
Transfer taxes are, unfortunately, not eligible for tax deduction.
However, it is possible to lower the amount you pay in capital gains taxes.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
According to the IRS, sellers have the option to treat paid transfer taxes as selling costs, allowing them to subtract these from their home’s closing sale price. By doing so, they can lower the capital gains taxes owed on any profit earned.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or local neighborhood organization. Since these can vary greatly by location, consulting a professional is usually a good idea.
If you’re selling your home without a realtor, seeking professional advice can clarify the process and help you understand what to expect regarding the pros and cons of selling a house without a realtor.
Transfer tax exemptions for Des Plaines
Not all Des Plaines real estate transactions are subject to transfer taxes. Here is a list of some possible exemptions for which you might qualify. For a complete list, consult the Illinois transfer tax payment document:
- Transfers made before Jan. 1, 1968, even if recorded later
- Transactions involving government entities
- Deeds confirming or correcting a prior deed with no new payment
- Sales where the purchase price is under $100
- Transfers related to debt security or foreclosure
- Transfers between related corporations during mergers or reorganizations
Estimating transfer taxes for your home sale
If you want a good idea of what you might earn from selling your Des Plaines home, why not use HomeLight’s Net Proceeds Calculator? This tool will factor in expenses like closing costs, transfer taxes, agent fees, and any improvements made to the property, giving you a better picture of what you might walk away with when all is said and done.
For an even better idea of what you can earn from selling your home, consider working with a top Des Plaines real estate agent. HomeLight can connect you with a real estate professional today, putting you on the right path to selling your home in a way that is simple, certain, and satisfying.
Editor’s note: This post is intended for educational purposes and does not serve as legal or financial advice. References to Des Plaines area tax services or attorneys should not be viewed as endorsements.
Header Image Source: (Roger Starnes Sr/ Unsplash)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
