Every time a property is sold in Chicago, buyers and sellers pay a “transfer tax” (officially called the Real Property Transfer Tax, or RPTT) on the value of the transaction. Think of it like a sales tax on real property. Cook County and State of Illinois also charge a RPTT. For the Chicago RPTT, the buyer’s portion is $3.75 and the seller’s portion is $1.50. The seller’s portion goes to the CTA.
This week, three ordinances were introduced that would either increase the RPTT and divert that increased portion to a specific purpose, or save some property transactions from having to pay the RPTT.
- O2019–5569 would raise the RPTT from $3.75 per $500 of the transfer price to $4.75 per $500 and divert the $1.00 to Chicago’s four pension funds. It would apply to all sales where the transfer price is greater than $1 million. For 2018 property sales, there were 2,600 sales worth over $1 million. At $1 per $500 to go to pensions, it would have generated $25,706,146 for the pensions (on $12,853,073,025.00 in sales for those properties of $1 million or greater).
- O2019–5859 would raise the RPTT from $3.75 per $500 of the transfer price to $9.75 per $500 on transactions where the transfer price is greater than $1 million. The additional $6 would be deposited into a new Homeless Transfer Tax Fund and a new Affordable Housing Transfer Tax Fund. (Read the ordinance for the full list of allowable expenditures for the money in those two funds.) For 2018 property sales, there were 2,600 sales worth over $1 million. At $6 per $500 to go to the two funds, it would have generated $154,236,876 for the pensions (on $12,853,073,025.00 in sales for those properties of $1 million or greater).
- The “Obama CBA Residential Area Affordable Housing Pilot Program” ordinance (O2019–5589) would exempt certain property transactions that occur in the proposed “Obama CBA Residential Area” (see the map) from the RETT. Exempt transactions include situations when the owner of an apartment building sells it to the tenants or a tenants association, pays a $20,000 per unit fee to the City, or sells to a “Qualified Purchaser” (non-profit organizations, for-profit companies, a land trust, or a land bank, that have “demonstrated a commitment” to providing affordable housing.
Note: We will have more information about the proposed Obama “Community Benefits Agreement” ordinance next week.