City Council Bungled the Transfer Tax Rebate

Kudos to fellow lawyer / blogger Peter Olson for uncovering this nugget. He hit a home run on this one. I have been cry-giggling about it since I read his post last night Real Estate in Chicago: Chicago "CTA Portion" Transfer Tax Refund?

Yes, yes. City Transfer Tax increased effective April 1. Yes, yes, the City Council made a last minute switch so that Sellers are paying the increase, not buyers. Yes, yes, the revised tax declaration form may be the worst, most confused tax form ever. Yes, yes, in the short term many Buyers will be forced to pay the seller's share of the tax based on the contract language they agreed to months ago, before anyone ever considered the increase or the fee shift.

The absurdest cherry on top turns out to be the "CTA Portion Refund." Recall that refund, was proposed and passed as part of the original ordinance, in February, 2008, when the entire transfer tax was going to be borne by Purchasers. At that it made good political sense for the aldermen to jump onto Governor's populist "protect the seniors" bandwagon. They wouldn't have to pay for bus rides, or the tax increase to fund those rides (ok, transit worker pensions too).

But now, the tax increase will in almost all circumstances be paid for by sellers. If the seller is lucky enough to find a senior-citizen buyer (who will attest that they intend to live there for the first year after closing) and the purchase price is less than $250,000, that seller can apply for a refund of the new CTA portion.

Lets all say one that together to make sure we all get it: "Sell to a senior, get a tax refund".

What were those wacky aldermen thinking? Three possibilities:

Promote reverse ageism in the City by encouraging sellers to focus marketing efforts on seniors (to the detriment of young families and low income wage earners)
Encourage more seniors to move to Chicago to take advantage of free transit rides
Eliminate the tax revenue stream that was supposed to pay for all those free rides

Not surprisingly, my attempts to contact a couple of councilmen have gone unanswered. I'll follow up here if they do. In the mean time, I suppose we "in the trenches" are going to have to 'card" all the buyers when we are on the sale side, to see if we can recoup our seller's shares of those tax increases....

PLM Title Shuttered

Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it. Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar , will always be there. We want to sleep easy at night, knowing that the client is protected. That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one. Set aside the problems involved trying to make a claim against a defun

FHA Loans and Condo Sales - Is Relief on the Way?

By all outward appearances, state government in Illinois has ground to a complete halt, with all eyes focused on the Governor's "problem" and all the related fal - der -rah. Its hardly business as usual in Springfield, but not everything has ground to a halt. Several new bills have been introduced this week. That is not to say that they will be of benefit to we the people. Nonetheless, the cogs and gears are turning, and we are hoping for the best. One such proposal comes from Rep. LaShawn Ford of Chicago's west side, who is himself a real estate broker and entrepreneur . He is the author of House Bill 155 , introduced & referred to the Rules Committee Wednesday. It seeks to address one of the most common problems I am seeing in condominium resale transactions these days; the tension between many Declarations of Condominium and FHA loan guidelines. Many Condo Declarations provide Associations with a "right of first refusal," which basically allows t

MAYOR DALEY PROPOSES TIF FINANCING FOR SOME DISTRESSED PROPERTIES

Lets see how City Council reacts on this one, but the Mayor introduced a pretty interesting little ordinance that might be a real boon to first time area home buyers willing to buy and rehabilitate some bank-owned properties. Progress Illinois reports that the mayor's bill, introduced on March 9: "seeks to tackle the growing problem of vacant homes that are blighting neighborhoods across Chicago, and in particular in minority communities. Called the Vacant Building TIF Purchase and Rehabilitation Ordinance, the bill (PDF) proposes allowing residents with a household income no greater than 100 percent of the regional median income to apply for a tax increment financing (TIF) grant that would pay for up to 25 percent of the cost of purchasing and rehabilitating an empty residential property. Single-family empty homes or units in condo and cooperative buildings with four units or fewer are eligible. The empty homes must be located in a TIF district and must be in need of

Peter said…

Thanks for kudos...I guess I need to make some calls. I don't get it. If your explanation is correct, no offense to you, but that just seems ridiculous.

April 10, 2008 at 2:57 PM

Michael H. Wasserman said…

it kinda made sense that when the buyer was going to pay the supplemental tax, that they would cut seniors seller "lower-valued" property some slack. At least, I can see the political justification. I am fairly certain that they got so caught up in rush to shift the liability over to sellers that they forgot about the refund. Of course, I am very open to anyone else's interpretations or explanations as i am sure we can all agree that this is, uhm, shall we say, "goofy?"

April 10, 2008 at 3:41 PM

the wasserblawg

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