Illinois Property Tax Primer

From Suburban Chicago, the Daily Herald reports:

As a homeowner, you have a lot of responsibilities. From mortgage payments to home improvements, finally calling a place "home" can be both exciting and overwhelming. This tax season, we take a look at property taxes, a local tax on homeowners based on the value of the property they own.

According to the Illinois Department of Revenue, homeowners should know some basic information about property taxes to ensure that their property is assessed fairly.

"Property taxes are used to finance the majority of services provided to citizens within a community," said Piero Orsi, president of the Realtor Association of NorthWest Chicagoland.

"There are about 6,900 local governments in Illinois that use property taxes to finance their budgets. That's why Realtors are tax watchdogs who protect your property rights. Consumers, too, should get educated about the property tax process so that they not only know where their money is allocated, but their rights as well."

The first step in getting your property value properly assessed is understanding the tax cycle. Typically, the property tax cycle in Illinois lasts two years. During the first year your home's value is estimated and reviewed. The second year you are billed for the taxes for the previous year, usually paid in two installments. For example, this year you would pay taxes on assessments made in 2007.

Your home is assessed based on its market value, or the amount that it would sell for in an open market. With the exception of Cook County, all Illinois counties are assessed at 33½ percent of this market value. To make sure these evaluations are done correctly, you can compare the assessed value given to you with similar homes in your neighborhood.

"Assessors try to keep values accurate within different areas, but as a homeowner it is your responsibility to make sure you obtain a fair assessment," said Orsi. "Local Realtors are familiar with the fair market values of other properties in your area and can help you find comparable assessments."

Here are some possible reasons property taxes may increase from information provided by www.YourlllinoisHome.com under "Financing" then "Property Taxes."

• Property values in the area are increasing.

• Improvements were made to the property (e.g. an addition added; extensive remodeling; a new deck or patio).

• The property was under-assessed in relation to other properties and this error has been corrected.

• The property has a homestead exemption that has been removed.

As a homeowner in Illinois, you may also qualify for a property tax exemption depending on your situation. Here are a few from the Illinois Department of Revenue:

General Homestead Exemption. You can qualify for this exemption if you occupy your property as primary residence on or before Jan. 1 of the tax year. You are eligible for up to $5,500 reduction in assessed valuation available for 2008. This amount rises to $6,000 in tax year 2009 and thereafter.

Senior Homestead Exemption. For those 65 years of age and older who own and occupy the property as a principal residence.

Senior Assessment Freeze. Seniors who are at least 65 years old and whose total household income is less than $55,000. This "freezes" your home's assessed value as long as you qualify for the exemption.

Homestead Improvement Exemption. Applies to those who add on to, remodel their property or rebuild after a catastrophic event. Exemption continues for four years after the remodeling or rebuilding is completed and occupied.

Disabled Persons' Exemption. For those who are disabled or become disabled within the assessment year. Participants may not claim both this and a Disabled Veterans' exemption.

Disabled Veterans' Standard Exemption. For housing owned and used by a disabled veteran or his or her unmarried surviving spouse. Determined by the Illinois Department of Veterans' Affairs.

Returning Veterans' Exemption. Applies to Illinois residents who served in the U.S. Armed Forces, Illinois National Guard, or U.S. Reserve Forces upon their return home. Participants can qualify in subsequent year if he or she returns to active duty.

"When you purchase a home, it is important that you find out the property tax amount that has recently been paid and if the previous owner's tax bill included any exemptions," said Orsi. "Some exemptions may apply to you as the new owner. Visit www.YourIllinoisHome.com, Financing, www.iltax.com/ for more information."