Good Morning, everyone!
This is an anxious time of the year for thousands of homeowners here in Chicago, and across Cook County IL - the county in which Chicago is located. Generally, in early October, the second and final installment of Real Estate Property Tax bills are sent to all property owners here.
Our Team received a lot of calls and emails early last month asking if the recent slowdown in the Chicago Real Estate Market might result in a tax savings this year.
Unfortunately, not! Why?
In sum, the property Assessed Values, which determine applicable real estate taxes for specific properties in the City of Chicago and in many suburbs, were calculated at least a year ago, before the current credit crunch and price downturn really impacted our market.
"We have a lot of people who are confused because the current economic circumstances would lead them to believe that their assessment should go down," said Cook County Assessor James Houlihan. "Their actual tax liability has gone up."
Indeed, many have seen sizable increases in their 2007 Real Estate Taxes, with the second of two installments due November 3, 2008. But others have seen more modest increases. A few have seen slight drops.
For our own house, in the South Edgebrook Neighborhood on the Northwest Side of Chicago, our Real Estate Taxes for the 2007 Tax Year have increased 7%.
We also own four investment properties across the North Side of Chicago. Curiously, taxes for these non-owner occupied properties actually FELL - each about 1%!
The formula is a bit confusing. But here is why many have seen taxes on their homes and investment properties have seen their bills sharply increase, while others have seen more modest gains, stability, or slight decreases -
- A major tax-assessment break is being phased out, starting in the City of Chicago. Because of the Cook County Three-Year Reassessment Cycle, many assessed values in Chicago and its Northern and Northwestern Suburbs had their assessed values calculated one or two years ago, before the current credit and housing crisis began to bring values down.
- In some cases, caps on the amount of a real estate tax increase reduced amount now due. However, those ceilings may not apply to all municipalities and taxing entities. In a few Cook County Suburbs, voters approved referendum measures, which raised their local real estate taxes.
- Legislation several years ago creating a 7% annual limit on assessment increases may vary depending on length of ownership, increase in assessed value, the time of purchase, and, in some cases, household income.
The Cook County Tax Assessment Procedure is very complex, according to Laurence Msall, President of The Civic Federation. It involves tax rate multipliers and multiplication factors to adjust local tax levels versus those in other parts of the State of Illinois. Specific tax rates for individual homeowners are difficult to predict in advance.
Current real estate tax bills, covering Tax Year 2007, due in arrears, will show the biggest increases in the North and Northwest Suburbs of Chicago. In the City of Chicago, the cap on tax assessment increases has been reduced this year as it is being phased out by State of IL law. Therefore, some in the city are seeing double-digit tax increases.
Perhaps the most fortunate segment of the taxpayer group includes those living in the South and West Suburbs of Chicago. In these areas, assessed values were calculated earlier this year, and, in part, may take into account the current trend toward declining average property values.
See our post yesterday via BlogChicagoHomes.comfor more info, as well as a link to Hal Dardick's Chicago Tribune story.
DEAN & DEAN'S TEAM CHICAGO
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