Chicago Transfer Tax: Near North Side Buyer & Seller Guide

Are you budgeting for closing costs and wondering how Chicago’s transfer tax fits in? You are not alone. The rules can feel complex, especially when city, county, and state layers may all apply. In this guide, you will learn which taxes typically apply to Near North Side properties, who usually pays, how to estimate the amount for your closing budget, common exemptions, and what steps to take next. Let’s dive in.

What transfer taxes apply

Near North Side properties sit within the City of Chicago and Cook County, so your transaction may have multiple layers of transfer and recording taxes.

City, county, and state layers

• City of Chicago Real Property Transfer Tax. This applies to transfers of real property located inside Chicago city limits, which includes the Near North Side.
• Cook County transfer or recording tax. Many transactions in Cook County carry a county-level transfer or recording tax and related fees.
• Possible Illinois state documentary or transfer tax. Some recorded instruments may trigger state-level documentary taxes or fees. Confirm current state requirements for your situation.

The practical effect is straightforward. Transfer taxes are generally calculated from the sale price or consideration, paid at closing, and itemized on the Closing Disclosure or settlement statement as their own line items.

Who runs these programs

• The City of Chicago Department of Finance administers the Real Property Transfer Tax and publishes the ordinance, rate schedule, and filing instructions.
• The Cook County Recorder or Clerk handles county-level transfer taxes and recording fees under local ordinances or state law.
• The Illinois Department of Revenue provides guidance for any state documentary or transfer taxes.

Because ordinances can change, always confirm current rates and procedures with these authorities or through your title company before you finalize your numbers.

Who pays in Near North Side deals

Contract controls payment

Legally, who pays a transfer tax depends on your purchase contract and applicable law. The standard contract or a rider typically spells out which party pays each tax or fee. Local customs can guide expectations, but the written agreement controls.

Local customs and common splits

In the Chicago area, many sellers expect to pay the city transfer tax as part of seller closing costs. Practices vary by market conditions and property type, and you will also see split or negotiated allocations. For example, parties sometimes agree that the seller covers the city portion while the buyer covers a county portion, or that the seller offers a credit that helps offset the buyer’s closing costs, including taxes.

Condo resales, new construction, investor purchases, and owner-occupied sales can each have their own norms. Ask your agent and title company what is typical for your specific building and price point, then negotiate what works for your goals.

Put it in writing

Be explicit in the contract. Use clear language such as “Seller to pay City of Chicago transfer tax” or “Buyer to pay all transfer taxes.” Clear drafting prevents last-minute surprises and keeps everyone aligned.

Exemptions and special situations

Common exemptions

Local ordinances can exempt certain transfers, often when no consideration is exchanged or when the parties fit a defined category. Examples include:

• Transfers between spouses or incident to divorce
• Transfers to or from certain governmental entities or qualified nonprofits
• Some court-ordered transfers, such as probate or condemnation
• Gifts or transfers where no consideration is exchanged, when properly documented
• Transfers to a revocable trust or between a taxpayer and a wholly owned entity, subject to specific rules
• Foreclosure-related transfers and tax sales, which often follow different procedures

Always check current rules to confirm whether an exemption applies to your exact situation.

Documentation and audit risk

Exemptions usually require affidavits, certified documents, or exemption declaration forms at closing. Title companies review and submit the paperwork, but incomplete or incorrect documentation can lead to additional tax assessments and penalties. Transfers that are structured mainly to avoid the tax are subject to audit, so keep the documentation accurate and aligned with the ordinance definitions.

How to estimate your transfer taxes

You can build a working estimate early so you know what to budget, then refine it as you move toward closing.

Step-by-step method

1. Confirm the property is inside Chicago city limits. Near North Side properties are inside the city, so city transfer tax rules apply.
2. Check the current City of Chicago transfer tax rate and whether the ordinance assigns separate buyer and seller portions.
3. Check Cook County transfer tax and recording fees for your document type.
4. Confirm if any Illinois documentary or transfer tax applies to your instrument.
5. Add standard recording and title-related fees typical for Cook County. Your title company can provide a schedule.
6. Apply the rates to your sale price and add the estimated fees to get a total.

Calculation template

Let P = sale price.

• City tax = P × R_city (compute buyer and seller portions separately if the ordinance splits them)
• County tax = P × R_county
• State documentary/transfer tax = P × R_state, if applicable
• Recording and administrative fees = F_recording

Total estimated transfer taxes and recording = City tax + County tax + State tax + F_recording.

Your purchase contract will assign who pays each component. Your lender and title company can produce a closing-cost estimate that reflects this allocation.

Budgeting guidance

As a rough placeholder before you have exact rates, many Chicago buyers and sellers reserve a small percentage of the sale price for combined transfer taxes and recording fees. It can range from tenths of a percent up to low single digits depending on which layers apply and who pays what. For early budgeting, it is reasonable to set aside about 0.5 percent to 2.0 percent for transfer taxes, recording fees, and related closing costs, then refine with title company figures.

How taxes affect your bottom line

Seller net proceeds

Seller net proceeds equal the sale price minus mortgage payoff, seller closing costs, any transfer tax the seller agreed to pay, commissions, and other fees. If you plan to offer a concession or cover a buyer portion of tax, you should see that reflected on your net-proceeds statement.

Buyer cash to close

Buyers bring funds for any taxes assigned to them by the contract, plus prepaid items and standard buyer closing costs. If you are rate shopping or comparing buildings, ask your lender and title company for a line-by-line estimate that includes the assigned transfer taxes so you can compare total cash to close.

Negotiation tips

• Use tax allocation as a bargaining chip. A seller may agree to cover a buyer portion to strengthen the offer, or a buyer may take on a portion in exchange for a price reduction.
• For price-sensitive sellers, compare offering a credit against reducing the list price. Evaluate which option preserves more net proceeds after taxes and fees.
• Align your strategy with current market conditions. In a slower market, covering additional costs can help your listing stand out. In a competitive market, buyers may shoulder more fees to win the deal.

Closing logistics and next steps

Title company’s role

Title companies calculate, collect, and remit transfer taxes and recording fees at closing. They will also provide instructions on forms and documentation for any exemptions and will coordinate with your lender and attorney as needed.

Review the settlement statement

The Closing Disclosure or settlement statement must itemize each tax and fee. Review it carefully before signing. Flag any line items that do not match your contract allocation or your expectations.

If you think you qualify for an exemption

Start early. Contact the title company to confirm documentation requirements, gather affidavits or certified documents, and provide them well before closing to avoid delays.

Quick checklist

• Verify the property is in Chicago and subject to city rules
• Confirm current city, county, and state rates for your document type
• Decide who pays what, then write it into the contract
• Ask for a preliminary closing-cost estimate from your lender and title company
• If an exemption may apply, collect documentation early and submit in advance
• Review the Closing Disclosure for correct tax allocation before closing

Local guidance for Near North Side clients

Chicago’s Near North Side has a diverse mix of condos, townhomes, and single-family residences. Each property type can carry different expectations for who pays which tax and how to document exemptions. You will save time and avoid stress by getting your allocation and estimate set early in the process, then having your title company confirm the final figures before closing.

If you want a clear, step-by-step plan for your sale or purchase, you can lean on a local advisor who knows the buildings, the contracts, and the process. If you need a net-proceeds statement, a buyer cash-to-close estimate, or coordination with your title company and lender, reach out to schedule time. You will get a straightforward plan to move forward with confidence.

Ready to run the numbers for your Near North Side move or sale? Connect with John Lyons to get a personalized closing-cost breakdown and a clear path to the finish line.

FAQs

What is the Chicago real property transfer tax?

• It is a tax the City of Chicago applies to real estate transfers inside city limits, calculated from the sale price or consideration and typically collected at closing.

Who usually pays the transfer tax in Near North Side condo sales?

• The contract controls payment, but many Chicago sellers expect to pay the city transfer tax, and buyers and sellers often negotiate how to split any county or other fees.

Are there exemptions for family or no-consideration transfers?

• Yes, certain transfers such as between spouses, incident to divorce, or gifts with no consideration may qualify, but you must provide required documentation at closing.

How can a buyer estimate transfer taxes before making an offer?

• Confirm current city, county, and state rates, apply them to the price, add recording fees, and ask your lender and title company for a preliminary closing-cost estimate.

Where can I verify current transfer tax rates for Chicago and Cook County?

• Check with the City of Chicago Department of Finance, the Cook County Recorder or Clerk, and the Illinois Department of Revenue, or ask your title company for current schedules.