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Eloanpro, Real Estate Pro in Chicago Heights, IL

If you have a 30-50% value increase aftter a 203k Rehab loan does Chicago increase your taxes?

Asked by Eloanpro, Chicago Heights, IL Fri Jan 25, 2013

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Manuel Brown (312) 600-5710’s answer
I have to say I love one of the answers, “if permits were obtained.” Dear home rehabber; please make sure you rehab your place legitimately. I have personally known someone who did not obtain permits for a rehab and he had a fire. When the insurance adjuster went to the property and inspected it, they than went to see what permits had been pulled. It turns out no permits were filed and the insurance claim denied.

Property taxes are assessed in Illinois every two years and depending on where we are in the cycle is when you can expect your property to be re-assessed. http://tax.illinois.gov/publications/localgovernment/ptax1004.pdf . If at the time you receive your new tax bill and you feel it is too high, you can appeal. If you do a Google search you can find an attorney that specializes in property tax appeals.
1 vote Thank Flag Link Fri Jan 25, 2013
Hi, Eloanpro :-)

In Illinois, the County Assessor's office examines your property and gives it an "Assessed Valuation" based on this examination. The Cook County Assessor uses a somewhat complicated method to calculate the final tax bill, but generally speaking it happens like this:

1. Once every three years, the Assessor reviews every parcel (by Property Index Number or "PIN") in a particular Township. The Assessor reviews one-third of the Townships each year in a regular cycle.

2. During the review, the Assessor notes whether there have been any significant changes to the property: additions, demolitions, new construction, change in use, etc.

3. The Assessor also reviews and notes any changes in the market value of the property based on sales recorded over the past three years of similar properties in the same vicinity and determines a current "Market Value" for the PIN.

4. The Assessor applies the "Assessment Level" determined by law (curently 10% for residential properties in Cook County) to give a particular PIN an "Assessed Valuation" amount based on the above analysis. This number is the basis of your tax bill.

5. The Assessor works with various taxing districts (city, state, county) to review budgetary needs for a particular location and assigns an "equalization factor" (multiplier) and tax rate so that each taxing district has sufficient funds to operate in a given year. This results in a so-called "Equalized Assessed Valuation (EAV)" basis for property tax.

6. Property owners are entitled to certain deductions to this amount based on their ownership and life status, called "exemptions" (owner-occipied, senior citizen, vacant property, for instance) that can reduce the EAV of a property.

7. The Assessor determines the final tax bill by multiplying the Equalized Assessed Valuation after exemptions by the Tax Rate for the particular property type. This is the amount you must pay.

There's a good outline of this process on the Cook County Assessor's site at http://www.cookcountyassessor.com/estimatedtaxbill.aspx

So, in your case, the city portion of your property tax depends primarily on the property's location, what type of property it is, and how much money the municipality estimates it will need in coming years. My colleague rightly notes that some projects that require a permit may increase the Assessor's "Market Value" of the property (especially if the size of the building on the property increases), and this oftentimes happens. My guess is that if you made significant changes to the property (more baths, finished basement, air conditioning, etc.), that the Assessed Valuation will increase, and therefore taxes will go up.

However, it's equally possible that the tax bill for a particular property can increase without any significant changes to its nature. This has happened in many communities over the past several years, as the need to fund government services has increased.

Also, be aware that you may challenge the Assessed Valuation of any PIN once per year. Each township has a specific deadline for appeals (challenges). Take a look at http://www.cookcountyassessor.com, and select "Appeals" for more information.

Hope this helps you to understand the process. Good luck!

Regards,

Don Pasek, CIPS, TRC, ADPR
Omniterra Real Properties
Chicago
1 vote Thank Flag Link Fri Jan 25, 2013
Best to check with the local assessor to find the calculations for your question
0 votes Thank Flag Link Sat Jan 26, 2013
Great detailed answer, thanks!
0 votes Thank Flag Link Sat Jan 26, 2013
Cook county has an insane property tax system, so nobody know where taxes will go. There is an assessment every three years. When you pull permits for the work, then they are considered in the assessors evaluation so your taxes will probably go up. How much they will go up is a guess. I have talked to many people about this and there is a deliberate effort by the politicians make it impossible to figure out property taxes in this county.
0 votes Thank Flag Link Fri Jan 25, 2013
If permits were obtained then likely the taxes will increase due to the repairs made.
0 votes Thank Flag Link Fri Jan 25, 2013
Taxes are crazy. You never know what they are going to do, but if you raise the value, you have to assume the taxes will also rise.
0 votes Thank Flag Link Fri Jan 25, 2013
You need to contact the people at the city of Chicago Heights and/or county and ask how they determine taxes
0 votes Thank Flag Link Fri Jan 25, 2013
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