Mt. Prospect might swap who owes transfer tax from buyer to seller

The real estate transfer tax in Mount Prospect is different from that in many surrounding communities.

For one, it is charged to the buyer, rather than the seller. And those paying the tax face a cumbersome process involving 27 steps and multiple village departments.

On Tuesday, village trustees meeting as a committee of the whole discussed ways they could change that.

The tax, first imposed in 1987 at $1 per $1,000 of sale value, is now $3 per $1,000.

Among the proposed changes outlined this week by village Finance Director David Erb are switching the tax to the seller, rather than the buyer. The four neighboring communities that require a transfer stamp - Schaumburg, Rolling Meadows, Elk Grove Village and Des Plaines - all charge the tax to the seller.

In addition, the village would no longer link the process of setting up municipal utilities to the paying of the tax.

"We feel that the combination of these changes will improve the experience for the resident," Erb said.

If the board passes them, the changes would be effective by July.

The proposal met with reservations from trustees on one key front - the possibility that a homeowner who already paid the tax as a buyer will once again have to pay it as a seller.

"I can guarantee you that everyone that purchased a piece of property after 1987 will pay three times, because they paid when they came here, they might have paid before they came here and now they're going to pay when they leave," Trustee Steven Polit said.

Residents and real estates professionals also voiced concerns.

"The cost of switching this tax over from the buyer to the seller is being borne entirely by any seller who bought their house since 1987," said Tom Zander of Picket Fence Realty. "I don't think you could frame this in a way that would sound fair to me when I sell my house. It just is double taxing."

Erb's recommendations try to address that with discounts offered during a phase-in period for properties recently taxed under the current process.