Monthly Archives: May 2014

How Are Property Taxes Calculated in Illinois?

how-illinois-property-taxes-calculatedIf you’ve noticed that your property tax bill increases at a rate that doesn’t correspond with changes in home prices on the market, you may wonder how your county assessor determines your annual property tax bill. This blog post explains the process of how your property tax assessment is calculated.

You may get more out of this post if you read it with a copy of your latest property tax bill handy.

It All Starts with Government Spending

The first step in determining how much you owe in property taxes is based on how much revenue your county needs to generate to fund the budgets of all of the taxing bodies. Most property tax revenues go towards funding local school districts, followed by the other taxing bodies such as the fire department, police department, libraries, water reclamation districts, forest preserves, park districts, mosquito abatement districts, etc.

Aggregate Rate & EAV

After the total amount of the property taxes to be levied in a given year is established, the taxing authorities determine the property tax rate that must be applied to the total value of real property in each taxing district in order to raise the required property tax revenue. In a simplistic example (ignoring adjusting factors such as levels of assessment, exemptions, state equalization, etc.), if a taxing district needs to generate $5 billion in property tax revenues to cover its budgeted spending and all of the real property located in the taxing district is valued at $100 billion in the county, then the tax rate would be 5% or $5B/$100B.

The market value of your home is estimated by the assessor using sales information of homes similar to yours in your area, and then used in determining your home’s assessed value.  Your home’s assessed value is then equalized along with all other properties in accordance with applicable law. The tax rate is multiplied by the equalized assessed value (EAV) of your home net of any exemptions applied to your property.

Property Tax Exemptions

You may qualify for one or more of several property tax exemptions. Exemptions are available to certain taxpayers who may qualify on the basis of:

  • Residing in the property
  • Senior citizen status
  • Veteran status
  • Disability

Property Tax Fairness

Thus, whether the market value of your property goes up or down in any given year, may have no effect on your property tax bill because your county needs to fund its budget regardless of home prices and there are other non-market forces that determine your property tax bill.

Because your county is using macro/aggregate information, there are inherently discrepancies in fairness for what you may be asked to pay in property tax relative to other properties.

Ascertaining whether the assessed value of your property is fair or should be appealed can be time consuming and difficult, as there are many factors that determine what properties are actually comparable to yours.

Cook County homeowners: click here for more information on how to read your tax bill.

Contact Kensington to learn more or for a free property tax appeal estimate if you live in Cook County

Why You Pay Higher Property Taxes If You Don’t Appeal

Why You Pay Higher Cook County Property Taxes If You Don’t Appeal One of the most unpleasant and unspoken aspects of paying property taxes is that, if you don’t appeal for reductions, you may be paying more in property taxes than you should – perhaps even $1,000 or more. Why?

Again, It Starts with Government Spending

As we covered in our How Are Property Taxes Calculated in Illinois? blog post, the first step in determining your property taxes is the property tax levy. How much revenue is required to support your local government spending on schools, fire departments, police departments, libraries, etc.?

It Ends in a Zero Sum Game

Once the total valuations for each taxing district are certified it is the County Clerk’s job to “back into” the tax rates needed to meet the levies for each taxing district. If your property is not assessed fairly you will pay more than you should when your district’s tax rate is set and multiplied against your assessed valuation. Property tax rates are set once a year.

As many property owners seek a fair assessment through the appeals process, those property owners not appealing an unfair assessment are going to pay more than their fair share of the overall tax burden. This can easily amount to thousands of dollars.

We believe every property owner can best protect their interests in such a system by consistently evaluating their assessed value and appealing when unfairly assessed to ensure they are paying no more than their fair share.

Why You Should Evaluate Your Assessment Annually

Every property in Cook County is reassessed every three years. If you appeal in the first year of a reassessment, the new assessed value of your home should hold until it’s reassessed again three years later. Thus, a property tax appeal in year one can offer three years of reduced property taxes.

This does not mean you should only appeal once every three years. Many property owners appeal in non-reassessment years for a variety of reasons, such as an unfair assessment, property description error, recent purchase price below market value, etc. Since property taxes are a zero sum game you should review your assessment against similar properties annually to ensure a fair assessment and that you pay no more than your fair share every year.

Contact us for a free fair assessment estimate today