Illinois real estate math
Illinois transfer tax: count the $500 units first
Illinois state transfer tax is $0.50 for each $500 of taxable value or fraction of $500. Divide taxable value by $500, round any fractional unit up, then multiply by $0.50. A taxable value of $250,001 creates 501 units and $250.50 in state tax. County and municipal taxes are separate layers.
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Which transfer-tax rates should you use?
| Layer | Rate per $500 or fraction | When to use it |
|---|---|---|
| Illinois state | $0.50 | A taxable transfer under Article 31 |
| County tax authorized by 55 ILCS 5/5-1031 | $0.25 | When that county tax applies to the transfer |
| State plus that county tax | $0.75 combined | Both layers apply, with the same taxable units |
| Chicago City portion | $3.75 | A covered Chicago transfer, subject to local rules |
| Chicago transit portion | $1.50 | A covered Chicago transfer, subject to local rules |
35 ILCS 200/31-10 supplies the state rate. 55 ILCS 5/5-1031 authorizes the separate county layer. Add county tax only when it applies. The $0.75 figure combines two layers using the same units; it is not a municipal rate or a universal total for an Illinois closing.
The Illinois legislative tax handbook describes the state tax as imposed on sellers when they transfer title. A question can assign a closing charge to a party, but cost allocation between parties and liability to the government are separate issues.
Chicago Municipal Code 3-33-030 generally assigns the City portion to the transferee, usually the buyer, and the transit portion to the transferor, usually the seller. Its exceptions and collection rules still matter. These Chicago figures come from the city-linked 2026 S-74 code compilation, current through June 17, 2026. Confirm later ordinances for an actual closing. Other municipalities have their own rules; proximity to Chicago does not make Chicago rates apply.
Did the state rate rise to $0.75 in 2026?
No enacted increase appears in the current state provision reviewed for this page. HB5212 and SB3931 proposed that increase. Their status records reviewed October 22, 2026 show committee referrals, not enactment. A proposed July 1 date does not make a bill law. The current $0.75 state-plus-county total is also a different statement from a $0.75 state rate.
How do you calculate the $500 ceiling?
Tax = whole taxable units × the applicable rate. Ceiling means moving a fractional unit up to the next whole unit. An exact whole unit stays unchanged.
- Identify the taxable value given, or determine it from supported facts.
- Divide by $500.
- If a remainder exists, use the next whole unit.
- Calculate each requested tax layer separately, then add only those requested.
| Taxable value | $500 units after ceiling | State tax | State plus stated county tax |
|---|---|---|---|
| $248,750 | 498 | $249 | $373.50 |
| $250,000 | 500 | $250 | $375 |
| $250,001 | 501 | $250.50 | $375.75 |
| $325,000 | 650 | $325 | $487.50 |
For $248,750, the quotient is 497.5. Use 498 units: 498 × $0.50 = $249 state tax. If the stated county layer also applies, 498 × $0.25 = $124.50. Together they are $373.50.
The $250,001 row is a useful check. A $1 increase above $250,000 adds one taxable unit, not $1 in tax. It adds $0.50 state tax or $0.75 when both stated layers apply. Multiplying by 0.1% alone would miss the fractional-unit rule. Nor should you replace the statute with $1 per $1,000 or fraction: $250,001 would then incorrectly produce $251.
What does a known tax amount tell you?
If state tax alone is $225, there are $225 ÷ $0.50 = 450 taxable units. In this simple calculation, taxable value is greater than $224,500 and no more than $225,000. The tax does not reveal one exact value inside that range. An exact $224,500 would create only 449 units and $224.50 state tax.
Can you deduct a mortgage from the sale price?
Sometimes, but a seller payoff is not enough. Section 31-5 starts with full actual consideration, including a lien assumed by the transferee. Section 31-10 excludes the outstanding mortgage amount when the transferring document states that the transfer is subject to that mortgage.
Same $400,000 starting value, different mortgage facts
Qualifying subject-to transfer: the supplied full value is $400,000, including a qualifying $150,000 mortgage that remains outstanding, and the transferring document contains the required statement. With no other adjustments, taxable value is $250,000. State tax is 500 × $0.50 = $250.
Ordinary payoff: the seller instead pays off that $150,000 mortgage at closing and the lien is released. Do not deduct it merely because it reduces the seller's proceeds. With $400,000 taxable value and no other adjustments, state tax is 800 × $0.50 = $400.
86 Ill. Adm. Code 120.20(b) and (c) distinguishes full consideration from permitted deductions and requires support for deductions. It also excludes a mortgage deduction where the parties delay discharge to avoid or underpay the tax. This is not a shortcut for relabeling a normal payoff.
Check whether the supplied amount is cash paid, full consideration or net taxable value. In the subject-to example, $400,000 already includes the $150,000 debt; it is not $400,000 cash plus that debt. If a problem already gives net taxable value, do not subtract the mortgage again. Personal property, exchanges, partial interests and entity transfers can require additional rules. These simple examples assume the taxable transfer and stated adjustments are established; they do not settle a real transaction's tax liability.
What else changes the tax or paperwork?
Section 31-45 lists specific exemptions. Examples include a security instrument, a qualifying corrective document without additional consideration, and a deed or trust document with actual consideration below $100. The exemption depends on its conditions, not simply the label gift, trust or family transfer. Do not automatically subtract $100 from a taxable sale.
IDOR's PTAX-203 instructions, revised October 2024, direct preparers to round lines 11 through 18 upward to whole dollars and include qualifying outstanding mortgage amounts in full consideration before the permitted deduction. That form-entry step is separate from the $500-unit ceiling. When an exam problem already supplies taxable value, use it rather than inventing extra deductions.
Section 31-15(a) phased out paper revenue stamps by December 31, 2025 and requires electronic stamps or alternative indicia afterward. That does not mean every person must use one identical declaration screen. IDOR's MyDec guidance distinguishes participating counties and the fill-in PTAX-203 option for counties not using MyDec. Follow current county and local instructions for a closing.
Keep three questions separate: how much tax is due, who is liable or must reimburse it, and what must be filed. An exemption can answer the first without answering the other two.
Try six original transfer-tax questions
These are original study examples, not released or recalled PSI questions. Choose an answer before opening its explanation.
1. The value is just above a boundary
A taxable transfer has already-determined taxable value of $300,001. What is the Illinois state transfer tax alone?
- $300
- $450.75
- $300.50
- $601
Show answer 1
C is correct. There are 601 units after ceiling. A drops the fraction. B adds the separate county layer. C is 601 × $0.50. D counts units as dollars.
Change the fact: taxable value is exactly $300,000. Use 600 units and $300 state tax, without adding an extra unit.
2. Both stated layers apply
A transfer has 800 taxable units. State tax and the authorized $0.25 county tax both apply. No municipal tax applies. What is the combined amount?
- $600
- $400
- $200
- $800
Show answer 2
A is correct. A adds 800 × $0.50 and 800 × $0.25. B omits county tax. C includes only county tax. D incorrectly uses $1 per unit.
Change the fact: the question asks for state tax alone. The answer becomes $400, even though the transaction also has another tax layer.
3. The seller pays off a loan
A taxable $400,000 sale has no other adjustments. The seller's $150,000 mortgage is paid off and released at closing. What state tax follows these facts?
- $150
- $250
- $600
- $400
Show answer 3
D is correct. A taxes only the mortgage amount. B improperly subtracts the ordinary payoff. C includes state and the separate county tax. D uses 800 taxable units at $0.50.
Change the fact: the supplied $400,000 full value includes a qualifying $150,000 outstanding mortgage, the document says subject to that mortgage, and no other adjustment applies. The stated state-tax result becomes $250.
4. Work backward from state tax
State transfer tax alone is $225. Which taxable-value range fits the simple $500-unit calculation?
- Exactly $225,000 only
- Greater than $224,500 through $225,000
- $224,500 through $225,000, including both endpoints
- Greater than $225,000 through $225,500
Show answer 4
B is correct. The tax buys 450 units. A assumes one exact value. B gives the correct interval. C includes the lower boundary that produces only 449 units. D describes 451 units and $225.50 state tax.
Change the fact: $225 is instead the combined state and stated county tax. Divide by $0.75: 300 units, with taxable value greater than $149,500 through $150,000.
5. Calculate only Chicago's City portion
For this exercise, a taxable Chicago transfer has a $325,000 transfer price, no exemption or adjustment, and a City-portion rate of $3.75 per $500 or fraction. What is that portion alone?
- $975
- $3,412.50
- $2,437.50
- $487.50
Show answer 5
C is correct. There are 650 units. A uses the $1.50 transit rate. B combines both Chicago portions. C is 650 × $3.75. D combines state and the stated county rates instead.
Change the fact: the question asks for both Chicago portions under those assumptions. Add $975 transit tax to get $3,412.50. State and county charges are still separate.
6. A document corrects an earlier recording
A document meets Section 31-45(d): it corrects a previously recorded deed without additional consideration. How should you treat state transfer tax?
- Apply the stated exemption, then check required notation and other filing rules
- Tax the property's entire market value automatically
- Assume no government documentation can be required
- Apply Chicago's City rate everywhere in Illinois
Show answer 6
A is correct. A follows the supplied exemption without inventing relief from every filing rule. B ignores the qualifying facts. C confuses tax relief with all documentation. D applies a local rate statewide.
Change the fact: the new transfer includes additional consideration. Do not rely on subsection (d) merely because the document is called corrective; check the actual transaction and other potentially applicable provisions.
Transfer-tax questions answered
Who pays Illinois real estate transfer tax?
State transfer tax is generally a seller charge, as the Illinois legislative tax handbook explains. Identify the layer before assigning the rest. An exam question may expressly allocate a charge. State or local liability and reimbursement between the parties are separate issues, so a contract allocation does not automatically erase the government's claim. Chicago's ordinance generally places its $3.75 City portion on the transferee and its $1.50 transit portion on the transferor, with exceptions and an unpaid-transit-tax liability rule. Verify the applicable law and closing contract for a real transaction.
Does an Illinois transfer-tax exemption mean no PTAX-203 filing?
Not always. Section 31-45 contains exceptions to declaration relief. For example, qualifying government or charitable transfers under subsection (b) generally still require the declaration, subject to its stated exception. IDOR also explains the overlapping (b) and under-$100 (e) exemption: select (e), with an exempt-status notation on the transferring document. Check the actual exemption rather than assuming that no tax means no paperwork.
Are transfer tax, property tax and recording fees the same?
No. Transfer tax concerns a taxable transfer and its taxable value. Recurring property tax uses the applicable assessed-value system and local rates. Recording fees are separate document charges. A question asking only for state transfer tax does not ask for annual property tax, a proration, a recording fee or every closing cost.
Use the calculation in your exam practice
The June 24, 2026 PSI outline lists real property transfer fees at national XI.A.4 and transfer taxes at state III.C. The whole national Real Estate Calculations area is 7% of 100 scored questions. The whole state Additional Illinois Laws area is 25% of 40, or 10 questions. Neither figure promises a specific transfer-tax question count.
For more examples, use the math drill. Review proration methods when a problem asks about an ownership period, or compare transfer tax and property tax when the tax base is the sticking point.
For short broker-exam practice sessions between study blocks, you can download Pass Illinois. Check the taxable base, unit count and requested layer before looking at an answer.