Important Subject-to Change For Illinois Investors
Real Estate Transfer Tax Act Amended. Public Act 93-0657 amends the Illinois Real Estate Transfer Tax Act effective June 1, 2004. This new amendment now provides that if a controlling interest of ownership is transferred in “real estate entities” owning property in Illinois, such transfer of the controlling interest would be considered a transfer of real estate and thus real estate transfer tax would be owed. The transfer tax would be due even though the actual ownership of the real estate did not change. In other words, even though there is no change or transfer of the real estate out of the real estate entity to another person or entity, the transfer tax still applies. A real estate entity is defined as:
. . . any person including, but not limited to, any partnership, corporation, limited liability company, trust, other entity, or multi-tiered entity, that exists or acts substantially for the purpose of holding directly or indirectly title to or beneficial interest in real property. There is a rebuttable presumption that an entity is a real estate entity if it owns, directly or indirectly, real property having a fair market value greater than 75 percent of the total fair market value of all of the entity’s assets, determined without deduction for any mortgage, lien, or encumbrance.
Basically, after June 1st, if you have the seller deed the property to Trust and then change the beneciary of the trust to yourself, you'd owe RE transfer tax on the FMV of the property. Just an FYI
How Much is the tax?
[addsig]
$1.50/$1000 of value[ Edited by compwhiz on Date 03/12/2004 ]
compwhiz:
Here's a copy of a section of the act I found at the General Assembly web site regarding cost of the transfer:
"...at the rate of
50¢ for each $500 of value or fraction of $500 stated in the
declaration required by Section 31-25."
which looks like it makes it $1/$1000.
What's important to us sub2'ers in IL is this section:
"If, however, the deed
or trust document states that the real estate, beneficial
interest, or controlling interest is transferred ***subject to a
mortgage***(my emphasis), the amount of the mortgage remaining outstanding at the time of transfer shall not be included in the basis of computing the tax."
Which means that you only pay transfer tax on the amount of equity you paid for, not for either the property value or the sale price...nice!!!
Andy
Arytkatz,
You're forgetting .25/$500 county tax, so it's $1.50/$1000.
Anyway, need to get some legal clarification on the meaning of the new law.....it could be interpreted several ways....
Compwhiz:
Do all counties charge the extra $.50?
As to the legality, I agree. I read it the way I posted it, but I'm certainly no lawyer.
There is another Sub2'er in Addison who just bought a couple of houses. He records in Cook County, but he said he put in the amount of equity he paid for on the form and that's all the tax they charged him for (something like $86.00).
Andy
Well, I don't know about all counties, but I believe Cook and all collar counties do(Cook and Lake for sure). Once again, before the tax was levied on the amount of the consideration - now, I am not sure how to interpret the new law. Definitely need to see what the recorder's office will have to say come June 1st.