OP eyes transfer tax loopholes

Real estate tax may drop $300,000 next year

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There are 21 different exemptions Oak Park property owners can use to avoid paying the real estate transfer tax when they sell their property. For example, there is an exemption when money is transferred from a minor to his guardian or from a descendant to his executor.

Village Clerk Sandra Sokol is suggesting that the village explore charging some sort of fee in those exempt categories, rather than upping the tax itself.

"Ours is high, and I certainly don't recommend raising it," Sokol said.

Right now, the village charges $8 per $1,000 on most real estate transactions. With a soft real estate market, the village anticipates earning $3.7 million from the tax in 2008, down from the $4.07 it estimates it will collect this year.

The 2008 estimate is based on historical tax collection trends compared with interest rates and factoring in any large real estate transactions that have occurred over the years, according to Craig Lesner, Oak Park's chief financial officer.

"The exemptions are increasing because people are trying to find more creative ways to save money," Sokol said.

In all, the village has seen a 20 percent decline in revenues from the tax in the past three years, which Village Manager Tom Barwin believes is due to stagnant prices and a general softness in the real estate market, which he said is a national trend.

Lesner said, rather than adding a fee to those exemptions, he'd like to review them and make sure there is no abuse occurring.

Lesner said it's typical for a village to have some basic exemptions to the tax for mortgage refinancing and moving properties into trust, but "only because those are not true sales or transfers of the property."

"I think Oak Park is faring much better than a lot of other communities in terms of its real estate market," Lesner said. "We will not see a lot of the same issues here that you might be seeing in the national market."

Sokol said the recommendation will go from the clerk's office, to the village manager. to the board, which would vote on any change to the current real estate transfer tax ordinance.

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