Cook County Real Estate Tax Credit
So you are a buyer that is currently thinking of purchasing a home in Cook County and you are confused about the real estate taxes?
You're a seller and confused about the real estate tax credit?
Join the club! Hopefully I will be able to explain this to you without your head exploding! This is probably one of the most confusing aspects of buying or selling a home in the Northwest Suburbs.
So here goes -- obviously you know that Cook County is the 2nd largest county in the United States which means it is a huge lumbering ineffective machine that has problems. Cook County pays it's taxes 1 year or more in arrears (behind). So as an example, we just paid the 2014 bill in full and the first half of 2015 is coming due the end of March 2016.
Usual tax payment dates are twice a year in April and September. Cook County takes your last full tax bill and divide it in 1/2 for the April bill of each year. This is because the actual bill in September will have the tax bill fully approved/assessed. So you can actually say they take the easy way out on the 1st installment and just send you a quick bill on what you paid a year ago. It's a quick cheat that really doesn't have any cost savings to you the taxpayer.
The September bill is the full tax bill for the previous year. This is the bill where you actually see either a savings or your taxes go up.
Depending on what time of year you purchase or close on a home can mean you can owe over a years worth of taxes. The above example is the reason why. When you close on a property the taxes must be paid up to and including the closing day. So it is possible to have a credit for 14 months of taxes as a buyer or owe those as a seller. If you are a seller, you will have a good portion of this money in your tax escrow with your lender. Don't forget that they keep this money for you when the tax bill comes due.
Also depending your your locale, our customary real estate contract asks for either a 5% or 10% increase of that full year tax bill. This is a way to square up in case there is a tax increase coming due in the future because the future bill isn't even out yet! So think of it as padding the tax bill by a small agreed upon amount.
EXAMPLE: Closing date of February 28, 2016. Seller will give a credit for 1 year (all of 2015) plus what is owed for 2016 which is 2 months = 14 months of taxes + 5% = credit at closing to buyer. Buyer will pay the taxes due for 2015 because they will now live there when that bill comes due.
If you are thinking of buying a home in the Northwest Suburbs, please consider me as a 'buyers agent' for your purchase. An experienced veteran, like myself, can steer you through this 'mine field' on your way to your first or tenth home!
If you are researching this information to possibly sell your home, please email or call to discuss the advantages of my marketing abilities and getting your home turned to 'SOLD'.