Moving from Illinois to Arizona: luxury buyers' guide

Taxes at the transaction

Illinois layers three transfer taxes on a sale. The state tax is $0.50 per $500 of value and the county tax is $0.25 per $500, both customarily paid by the seller. The City of Chicago adds its own transfer tax of $3.75 per $500 paid by the buyer and a $1.50 per $500 CTA portion paid by the seller, a combined 1.05% of the price. A 2024 referendum that would have raised the city rate on sales above $1 million failed, so the flat structure remains. Closings in the Chicago area are attorney-driven, with each side's lawyer reviewing the contract during a short attorney modification period and the seller's attorney or a title company conducting the closing.

Arizona has no real estate transfer tax. A 2008 constitutional amendment prohibits the state, counties and cities from imposing one, so the only transfer-related filing is the Affidavit of Property Value recorded with the deed for a small fee. Escrow and title companies run the closing, split escrow fees between the parties by custom, and attorneys are uncommon in a standard residential purchase. The seller customarily pays for the owner's title policy. Because a luxury seller in Scottsdale or Paradise Valley does not pay transfer tax, net proceeds at a given price are noticeably higher than in Chicago, and the buyer's closing statement is shorter.

Taxes on holding: income, property and estate

Both states use a flat income tax, which makes the comparison simple: Illinois charges 4.95% and Arizona charges 2.5%, a rate Arizona reached in 2023 after collapsing its brackets. On $2 million of income the difference is roughly $49,000 a year. Illinois exempts most retirement income, including Social Security, pensions and qualified plan distributions, which softens the gap for retirees, while Arizona taxes that income at 2.5%. Illinois will continue to tax Illinois-source income after you leave, including gain on the later sale of an Illinois property.

Property tax is the bigger line for most luxury owners. Illinois has some of the highest effective rates in the country, Cook County reassesses on a three-year cycle, and bills are paid in arrears, so the buyer of a Chicago home receives a credit at closing for the seller's share of a tax that has not yet been billed and that is often estimated from the prior year. Arizona assesses owner-occupied residences as Class 3 property at a 10% assessment ratio and, under Proposition 117 passed in 2012, caps annual growth in the limited property value used for tax purposes at 5%. Effective rates in Maricopa County are a fraction of those in Cook County. Owners of a second home in Arizona should note that the primary residence classification does not apply to it.

Illinois imposes an estate tax on estates above $4 million, an exemption that is not indexed for inflation, with rates that reach 16%. It applies to Illinois real estate owned by nonresidents as well, so keeping a Chicago condo after moving keeps a piece of your estate within reach of the tax. Arizona has no estate tax and no inheritance tax. Arizona is a community property state and Illinois is not, which changes how title is held between spouses and how basis is treated at the first death. Federal estate tax exemption is $15 million per person in 2026.

Agency and disclosure law

Illinois licensees work under the Real Estate License Act of 2000, which makes designated agency the default: the sponsoring broker designates specific licensees to represent each client, and the brokerage as a whole is not treated as a dual agent. Dual agency by the same licensee is allowed only with written consent on a statutory form. Sellers of residential property must complete the Residential Real Property Disclosure Report, along with radon and lead disclosures. Because attorneys are involved in nearly every transaction, contract terms are negotiated after acceptance during the attorney review period.

Arizona licensees are regulated by the Arizona Department of Real Estate. Limited dual representation is permitted with written consent, typically on the Real Estate Agency Disclosure and Election form. There is no statutory seller disclosure form for improved property, but sellers have a common-law duty to disclose known material facts, and the Seller's Property Disclosure Statement published by the Arizona Association of Realtors is used in nearly every sale. Unsubdivided land in unincorporated areas requires a statutory Affidavit of Disclosure. Planned communities and condominiums must provide resale disclosures under Arizona's HOA statutes, and because a large share of luxury inventory in Scottsdale and Paradise Valley is in gated communities, those documents deserve careful reading. Inspection periods are contractual, ten days being the standard form default.

What to ask an agent on each side

On the Illinois side, ask the listing agent for a net sheet that itemizes the state, county and city transfer taxes and the property tax proration credit, since the arrears system means you will be crediting the buyer for taxes you have not yet been billed for. Ask whether the brokerage uses designated agency and who the designated agent will be for a buyer it brings. Ask your attorney whether an Illinois estate tax exposure remains if you keep any Illinois real estate, and how the sale timing interacts with your change of domicile.

On the Arizona side, ask for the limited property value history from the county assessor and whether the primary residence classification is in place, since the tax bill you inherit may not reflect your use. Ask for the HOA resale package early and for any architectural or short-term rental restrictions that affect value. Ask about water: the source, any private well, and whether the property is in an active management area. Ask about solar leases and their transfer terms. The site's Arizona directory groups agents by market, which is useful when deciding between Paradise Valley, North Scottsdale and the Tucson foothills.