As predicted, Illinois has realized its potential to realize on real estate transfer taxes with Fannie Mae and Freddie Mac. As we previously reported, Oakland County, Michigan, obtained a favorable court decision in March 2012, which denied Fannie Mae and Freddie Mac an exemption from state and local real estate transfer taxes, based on the nature of the tax as an excise tax. DeKalb County, in Illinois, has filed a lawsuit on essentially the same grounds, challenging Fannie Mae and Freddie Mac’s federal exemption from transfer taxes.
Fannie Mae and Freddie Mac realized the potential impact and have filed a lawsuit of their own against the state of Illinois and county recorders, arguing for the application of the federal exemption to include transfer taxes.
Given the stakes involved, this issue is likely to be hard-fought by both sides. We will continue to monitor this issue, so stay tuned for further updates.
