Member - NAHB - National Home Builders Association
House 2

HB3826 Transfer Tax

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The Home Builders Association of Illinois supports passage of HB3826 (Fortner) and requests a YES Vote on its consideration in the House Committee on Cities & Villages.

Amendment #1 to HB3826 prohibits home rule municipalities from collecting a real estate transfer tax on homes for which an impact fee has been assessed and collected. The legislation has no effect on State or County transfer taxation.

Collecting impact fees and transfer taxes is a form of double taxation which greatly burdens Illinoisans who wish to buy a new home. With passage of HB3826, home rule municipalities may choose to charge impact fees or transfer taxes on a new home, but not compound the expense by collecting both.

Impact fees are assessed and collected early in the development process and they become an overhead expense in the price of the new home.

A transfer tax is recorded on the HUD application and it can become an issue in determining whether a buyer(s) can afford the down payment, closing costs, and mortgage. The buyer pays the full tax at closing, which creates a great barrier to entry for home ownership.

Illinois is still very much in the housing recession that began nine years ago. We are 50th in the country in new home construction based upon a ratio of building permits to state population, a position we’ve maintained for over five years.

Please Vote Yes on HB3826, a bill to end double taxation on new home ownership in Illinois. If you have any questions or concerns, please call or write Bill Ward at: (217) 753-3963 or billward@hbai.org

Here are two examples of how HB3826 will benefit new home buyers in Illinois.

The City of Sycamore has the following fee schedule: currently assesses a school impact fee of $2453 on the construction of a three bedroom home, and $4167 on a four bedroom home. Sycamore collects a $5 per every $1000 of consideration on the purchase price of property, which comes to $1500 on a $300,000 (entry level) home. With passage of HB3826, Sycamore would still collect the $2453/$4167 for school impact fees, but would be prohibited from collecting the $1500 transfer tax.

The Village of Bolingbrook has the following fee schedule:

School Impact Fees:         $3580.80 for a 3 bedroom home / $4563.20 for a 4 bedroom home.

Park Impact Fees:              $4136 for a 3 bedroom home / $4838 for a 4 bedroom home.

Sewer Tap on Fee:             $12,000.

Transfer Tax:                         $7.50 per $1000 of consideration / $2250 transfer tax on a $300,000 property transfer.

The $16,838 could still be collected in impact fees, but not the $2250 transfer tax.