Understanding Wilmette’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you’re selling your Wilmette home, you might have questions about transfer taxes. How do they work in Illinois? How much are they? Who pays for them? Don’t worry. Transfer taxes aren’t complicated, and HomeLight is here to help.
Transfer taxes are fees levied by local or state authorities when real property (like a home) changes ownership. Transfer tax rates can differ significantly based on location and can greatly impact the overall cost of your transaction and your bottom line.
This guide will explain how transfer taxes work in Wilmette, including their cost, who is liable for them, and any possible exemptions. Additionally, we will explain how transfer taxes can affect your capital gains burden and why working with a real estate agent is a great idea.
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 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 to a property, essentially the document that verifies your legal ownership, is officially transferred to a new owner.
The amount owed in transfer taxes can vary significantly based on the property’s location. Different states, counties, and cities usually have their own rates and regulations for these taxes in place. Transfer taxes primarily serve as a means for local and state governments to generate revenue, as they fund various public services and infrastructure projects.
Who pays for transfer taxes?
Though the seller generally pays for transfer taxes in Illinois, this is not true in Wilmette. Since 1988, when the Wilmette Village Board adopted its transfer tax ordinance, the property buyer has been responsible for paying for transfer taxes in Wilmette.
What are the types of transfer taxes?
Transfer taxes typically vary based on local regulations but can generally be categorized into three types — state, city, and county, depending on the state. Here’s a brief overview of how it works in Wilmette.
State transfer taxes
For property transfers in Illinois, a documentary transfer tax of $0.50 per $500 of the home’s sales price is applied to all non-exempt real estate transactions. This is a baseline rate paid in addition to any county or city transfer tax fees.
County transfer taxes
Since Wilmette is located in Cook County, the county transfer tax rate is $0.50 per $1,000 of the property’s sales price.
City transfer taxes
Wilmette’s transfer tax rate is $3.00 per $1,000 of the property’s sales price. For example, on a property sold for $410,750, the buyer would owe $1,233 at the end of the transaction.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or other local neighborhood organizations. Since these can vary widely based on location, consulting a professional is advisable.
If you’re selling your home without a realtor, seeking professional advice might clarify some of the nuances of the process and provide a better understanding of what to expect regarding the pros and cons of selling a house without a realtor.
Transfer taxes deductible?
Unfortunately, transfer taxes are not tax-deductible. However, you can 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 can treat paid transfer taxes as selling costs, subtracting them from their home’s closing sale price. This allows them to minimize the capital gains taxes owed on any profit earned.
Transfer tax exemptions
Sometimes, a real estate transaction is exempt from transfer taxes. In Wilmette, this can happen for a variety of reasons. These can include property changing hands from a decedent to an executor or an administrator, real estate involved in a bankruptcy proceeding, or transactions involving the United States.
For a complete list of possible exemptions, consult the Village of Wilmette Real Estate Transfer Tax form.
Estimating transfer taxes for your home sale
To better understand what you can earn from selling your Wilmette home, consider using HomeLight’s Net Proceeds Calculator. This tool can help you calculate essential costs such as closing expenses, transfer taxes, agent fees, and any improvements made to the property, providing a clear estimate of your potential earnings from the sale.
Collaborating with a top real estate agent can also offer valuable insights tailored to your needs. HomeLight can connect you with a top Wilmette real estate agent today who can give you the peace of mind needed to sell your home quickly and easily.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Wilmette area tax services or attorneys should not be considered endorsements.
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