What is the property tax cycle?

In Illinois, taxes are paid one year in arrears and may follow this structure: Levy, Assessment, Review of Assessment Complaints, Equalization, Development of Tax Rates, Collection and Distribution.

What reasons do I have for filing an appeal?

In addition to vacancy, uninhabitable and an error in the description of the property, the two most common reasons are:

  1. Lack of Uniformity – Assessed value is not reasonable or there is unequal treatment in the context of the value placed upon comparable properties within the subject property’s neighborhood.
  2. Overvaluation – Assessed value implies a fair cash value above the three year median estimate of market value. Market Value, or Fair Cash Value, is the most probable sale price in an arms-length transaction as well as a competitive, open market and is determined by using one or more of the following approaches:
    • Sale Comparison: Comparison of similar, neighboring properties recently sold to the property being assessed.
    • Cost: Calculation of the cost to reproduce or rebuild a property’s improvements, subtracted by the depreciation amount and adding the land value.
    • Income Capitalization: The present worth of the income from an income-producing property is calculated by measuring the amount, quality, and durability of the future net income over the economic life of the property.

Why shouldn’t I contest the property tax assessment on my own?

Property taxation and assessment are dynamic processes. With constant rule changes and complex interactions of various parties, an individual’s appeal more often than not is unsuccessful because of an inability to navigate the pitfalls inherent in the processes.

What is it going to cost me?

Either a percentage of the tax savings or no savings and an increased property tax bill.

How does the Cook County Assessor determine the value of my home?

By the Mass Appraisal Method, which assumes average condition of the property’s characteristics of record and includes statistical data from neighborhood property sales activity for the prior three years.

When can I file my appeal against the tax assessment?

Although property tax advertisements and websites are continuously active throughout the year, your property’s assessed value and property taxes are determined at the local level during a set time. Each municipality has its own procedure and time-line for establishing the amount of property taxes owed by their residents. The municipality then sets its own appeal process in order to dispute a property tax assessment, which includes strict filing deadlines that are published in your local newspaper or posted on your township assessor’s website.

Should I hire a tax consultant?

Tax consultant’s can only submit documentation before the Assessor resulting in a property owner not achieving their objectives with respect to their property tax liabilities given this limitation.

If you inherit a home and chose to keep, what can you do about the property taxes?

Transfers of property may result in either reassessment, loss of exemptions or both, which will likely increase the property tax liability on the home. Therefore, at the time of inheritance, you must make sure to find out what exemptions were active and the taxable market value the local assessor has proposed for the home.

  1. The common exemptions are the Homeowner, Senior Citizen and Senior Freeze and each has its own qualifications. Depending on the date of the prior owner’s death, if he or she qualified for any exemptions then you will be able to apply for the same exemptions and they would be only for the tax years the prior owner met the requirements. Thereafter, you should apply for all exemptions that you qualify for.
  2. The home’s assessed value is the primary component of the property tax bill and reduction thereof is instrumental in reducing the total tax liability. As each property is unique so should be your property tax management strategy and an appeal ensures a reasonable and accurate taxable market value for the home.

How are my property taxes calculated?

Using Cook County as an example, your first installment is 55.0% of the total tax amount for the prior year. Your second installment is your property’s assessed value multiplied by the state equalization factor and the local rate minus any applicable exemptions and amounts paid for the first installment.

What does assessed value mean?

A property’s market value is determined by the Assessor, as of January 1st of the assessment year. In Illinois, the assessed value is 33 1/3% of the property’s market value and is reassessed every 4 years. In Cook County, the assessed value is determined by ordinance and property classification, e.g., 10% for residential properties, and reassessed every 3 years.

What is an equalization factor?

A multiplier applied to assessed valuation of each county that raises or lowers the level of assessments to the statutory level of 33 1/3% of market value to ensure that the tax burden is equitably distributed across boundary lines.

What is a mill levy?

The requested amount of revenue to be generated by the property tax. In most cases, the mill levy is the tax rate imposed on your property value where one mill represents one tenth of one cent. Assuming that County needs $1,000,000 for 2017 and the total assessed property values in the County are $10,000,000, the mill levy would be calculated by dividing $1,000,000 with $10,000,000, or 10%. If the Village’s is 2%, School district is 5% and Miscellaneous is 1%, then the total mill levy would be 18% as calculated by the County Clerk.

What are the available exemptions for my home?

Homeowner, Senior Citizen and Senior Freeze are the most common and apply only to one’s principal residence. Exemptions have distinct requirements and application procedures, you should contact your township assessor to discuss your circumstances and which exemptions may apply including, without limitation, Longtime Homeowner, Home Improvement, Returning Veterans, Disabled Veterans Homeowner and Disabled Persons.

I want to appeal my property taxes, why are we talking about the assessed value?

Property tax appeal is a misnomer. You appeal the assessed value in order to ensure that the Assessor is proposing a reasonable and accurate market value for the property.

Should I utilize a DIY tax app or tech-savvy company to challenge my assessed value?

Automated tax service apps as well as online companies merely collect data and barely scratch the surface of understanding the valuation methodologies and the subjective activity of the local market. That lack of knowledge or experience handling the data could hinder your property tax savings or refund.

If you inherit a home and chose to sell, do you qualify for the home sale tax exclusion?

Unfortunately, you will not because you would have had to move into the home and live there for at least two years before the sale to qualify. To deal with your potential capital gains tax exposure, you should consult with your accountant as you may benefit from the stepped-up basis rules for inherited property. In summary, a stepped-up basis means that the home's cost for tax purposes is not what the prior owner paid for it but what the fair market value is at the date of the prior owner's death.

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