Buying or selling in Chicago comes with a line on your closing statement that can surprise you: the transfer tax. If you are comparing a city condo to a northwest suburban home, this number can look very different. You want a clear, simple way to budget and negotiate it with confidence. In this guide, you will learn what the transfer tax is, who typically pays it, how Chicago differs from nearby suburbs, and how to plan your costs so there are no last‑minute surprises. Let’s dive in.

Transfer tax basics

A real estate transfer tax is a tax on the transfer of property ownership. It is separate from recording fees, mortgage taxes, and property taxes. You usually pay it when the deed is recorded. The closing agent collects it and remits it to the right government office.

Several levels of government can levy a transfer tax:

• Illinois state tax applies to most recorded transfers statewide.
• The City of Chicago adds a municipal transfer tax for property inside the city.
• Some counties or suburbs may impose their own charges, but many suburbs do not have a municipal transfer tax.

Illinois state transfer tax

Illinois charges a state real estate transfer tax on most deeds. The common statutory rate is $0.50 per $500 of consideration. That equals $1 per $1,000, or 0.1 percent of the sale price. The title company typically calculates and pays this at recording.

If your transaction qualifies for a state exemption, specific forms or affidavits are usually required at recording. The Illinois Department of Revenue and the local recorder’s office are the places to verify the latest rules and paperwork.

Quick state-tax example

• Sale price: $300,000
• State transfer tax calculation: $300,000 × 0.001 = $300

Chicago’s transfer tax

Chicago adds a municipal real property transfer tax for properties within city limits. The tax is calculated on the sale price or stated consideration. The city’s rate schedule is set by ordinance and can change. Always confirm the current Chicago rate on the City of Chicago’s official pages or with your closing agent.

The tax is due at recording. Your title company or closing attorney will collect it at closing, prepare any required forms or affidavits, and submit the payment when the deed is recorded.

Who pays in Chicago

The law requires payment at recording, but the contract decides who covers it. In practice, buyers and sellers can negotiate how to split or allocate the city transfer tax. Local custom varies by market conditions and leverage. Your agent will help you structure the offer so the allocation supports your goals.

How collection works

• The closing agent verifies taxing jurisdictions and rates.
• The agent calculates state and city transfer taxes.
• Required forms and affidavits are gathered for any exemptions.
• Funds are collected at closing and paid at recording so the deed can be recorded without delay.

Chicago vs. northwest suburbs

The biggest difference is whether there is a municipal transfer tax at all.

• Chicago: You will pay the Illinois state transfer tax and the City of Chicago transfer tax.
• Many northwest suburbs: You will pay the Illinois state transfer tax. Many do not have a municipal transfer tax. Some municipalities do, so you should check the specific suburb.

If you are moving from a Chicago condo to a home in the suburbs, your transfer‑tax costs may drop because you will likely avoid the city tax on the purchase. If you are selling in Chicago, plan for the city tax on the sale side unless your contract negotiates a different allocation.

Exemptions and special cases

Some transfers can be exempt from state or municipal transfer taxes. Each jurisdiction has its own rules and required documentation. Common examples to ask your title company or attorney about include:

• Transfers between spouses or those incident to divorce.
• Transfers to or from government bodies or public agencies.
• Transfers by court order or operation of law.
• Transfers to a revocable living trust where the grantor remains the beneficiary.
• Transfers with nominal or no consideration that still require an affidavit.
• Certain nonprofit, affordable housing, or redevelopment program transactions that may qualify for exemptions or credits.

Important: Most exemptions require specific forms at recording. If you do not provide the paperwork at closing, refunds later can be complex and may require formal requests to the taxing authority.

Budgeting checklist

Use this list to estimate your closing costs and avoid surprises:

• Illinois state transfer tax.
• City of Chicago transfer tax, if the property is inside city limits.
• County and city recording fees or stamps.
• Title search and title insurance premiums.
• Closing attorney or escrow fees.
• Prorations for property taxes and HOA dues.
• Any municipal exemptions or credits that may apply.

Sample calculations

You can estimate transfer taxes with simple formulas. Confirm current Chicago rates with your title company or the City of Chicago before you finalize your budget.

• State tax formula: Sale price × 0.001
• City tax formula: Sale price × current Chicago city rate

Examples:

• $300,000 sale

  • State tax: $300,000 × 0.001 = $300
  • City tax: Use the current city rate. For illustration only, if the rate were 0.75 percent, city tax = $300,000 × 0.0075 = $2,250.
  • Total transfer taxes in this hypothetical = $300 + $2,250 = $2,550, plus recording and title fees.

• $750,000 sale

  • State tax: $750,000 × 0.001 = $750
  • City tax: Use the current city rate. For illustration only, if the rate were 0.75 percent, city tax = $750,000 × 0.0075 = $5,625.
  • Total transfer taxes in this hypothetical = $750 + $5,625 = $6,375, plus recording and title fees.

Bold note: Always use the City of Chicago’s published rate for actual budgeting. The percentage used above is hypothetical.

Plan your negotiation

You can negotiate who pays the transfer tax in your purchase contract. Here is how to approach it:

• Discuss allocation early. Align on who pays the city tax and the state tax before you write or accept terms.
• Weigh market conditions. In a competitive market, the buyer may offer to cover more costs. In a slower market, the seller may agree to share.
• Use credits wisely. Credits can offset transfer taxes and balance the net for each side.
• Confirm on the closing statement. Make sure the allocation shows up correctly on your Closing Disclosure or settlement statement.

How I help you plan

You deserve a clear, stress‑free path to the closing table. As a full‑service listing and buyer’s agent with deep Chicago and northwest suburban experience, I help you:

• Verify current city and state transfer‑tax rules with your closing team.
• Model your true net, including transfer taxes, recording fees, and prorations.
• Negotiate allocation of transfer taxes as part of your broader deal strategy.
• Coordinate with your title company and attorney so the correct forms and affidavits are in place on day one.

If you are moving between Chicago and the suburbs, I will help you compare the two scenarios so your budget and timing are dialed in before you go under contract.

Ready to map out your numbers and negotiate with confidence? Connect with Maria Devins to get a clear, local plan for your next move.

FAQs

What is the Chicago real estate transfer tax?

• It is a municipal tax on property transfers within Chicago, paid at recording in addition to the Illinois state transfer tax, and calculated on the sale price.

Who usually pays Chicago’s transfer tax at closing?

• Payment is negotiable and set by the purchase contract. The closing must satisfy the city’s tax at recording, regardless of how the parties allocate it.

How much is the Illinois state transfer tax?

• The common statutory rate is $0.50 per $500 of consideration, which equals 0.1 percent of the sale price, typically collected by the title company at recording.

Do northwest suburbs charge a municipal transfer tax?

• Many do not, but some do. You should confirm the specific suburb and county recording fees with your closing agent for the exact property.

When are transfer taxes paid in a Chicago closing?

• They are paid at or before recording. The deed is not recorded until applicable state and city transfer taxes and recording fees are paid.

What exemptions might apply to Chicago or state transfer taxes?

• Possible exemptions include transfers between spouses, certain government transfers, court‑ordered transfers, and some trust transfers, usually with required affidavits at recording.