What would be the property tax for a newly constructed condo?

Asked by David, 60706 Fri Apr 3, 2009

I heard no tax on the new house for two years. But a seller of newly constructed condos told me that I should pay a property tax. What did I miss here? Anyone help me to understand the property tax? Thanks.

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Paul Garver, Other Pro, Hinsdale, IL
Sat Apr 4, 2009

This is a somewhat complicated question, and it is difficult to give you a truly accurate answer without knowing alot more details, that being said, let me take a stab at it. As always this is not to be considered specific legal advice for your situation, and you should always consult an attorney specifically about your situation.

Lets lay some groundwork first... in Illinois remember that property taxes are a year deferred. So, 2008 property taxes are paid in 2009, 2009 propety taxes in 2010. In Cook County they are paid in 2 unequal installements. The first installment is due at the beginning of March, and the second installment is due whenever the treasurer's office issues the bill in the second half the year (earliest I have ever seen is August, latest is the end of November). The first installment of any year is half of the previous year's property taxes. They do this so that the Treasurer's office has some time to figure out the property taxes for the year (remember there are alot of propertys in Cook County!!). So once they figure out the yearly property taxes (in the second half of the year) they subtract what was paid in the first installment (half of the previous year's tax bill) and that gives them the amount for the second installment. I know this seems a little off point.. but stick with me here, it is relevant.

Remember that taxes are issued on a PIN (property identification number or parcel index number - people say it stands for both things, but the bottom line is that it is a number that identifies the property that is being taxed). When someone buys a piece of property and decides to build condos on it, or if they were previously apartments and they are going to convert them, the ENTIRE property was taxed under one PIN number. This is important to understand... even if it was several apartments (that are now being converted) it is taxed under ONE PIN number. The process to start assigning individual PINs to each unit in a new construction condo, or condo conversion (converting apartments to condos) starts with the recording of the Declaration of Condominium with the County Recorder's office. We won't go into all the details of how the PINs get assigned and the paperwork involved, but you get the idea. Depending on the time of the year this is done, it could take between 1 - 2 years for the new PINs to be issued (if it was started now for example, then the condo would probably have an individual PIN for the 2009 taxes due in 2010, but if it was in November then it might not have an individually PIN until the 2010 taxes in 2011). Please note I used the words PROBABLY and MIGHT. It all depends on how busy the county offices are.

Also, it is important to know that the property taxes for a property as a whole (pre-condo division) will normally be much less than the property taxes post-division if you added together all of the condo units.

SO... lets translate what you have been told. If you bought in this year, and lets say they have started the process to get individual PINs for the condos, and lets assume that each unit will be individually PIN'ed for the 2009 taxes due in 2010. The taxes due this year in 2009 (which are actually the 2008 taxes) should be paid for by the developer because you did not own the property in 2008. The first tax bill for 2009 taxes that comes due in March of 2010 would be $0.00. Why? Remember the first tax bill is half the previous year's taxes, and under that PIN there were no previous year's taxes. The entirety of the 2009 taxes would be due in the second installment. In effect you would not have paid any tax until probably October or November of 2010 (almost a year and a half away). However note, that you will still pay the full tax for 2009 in the second half of 2010. The developer should have either given you a credit at closing or held money back, and/or signed a tax reproration agreement for the 2009 taxes (remember they owned the property for part of 2009). Did I mention that this is why it is important to have a good Real Estate Attorney who understands how this works? (Yes, my office is in Hinsdale, but my law partner lives in the city and we do alot of closings down there.)

One last thing, if the new PIN does not come out until the 2010 taxes dues in 2011, then the property will still be taxed under the old PIN as a whole. In the Declaration of Condominium it should list out the percentage interest of each unit, you would be responsible for the percentage of the property taxes that are attributed to your unit. This is kind of a good thing, since the taxes will be much less than if it they were individually PIN'ed and taxed. If this happens you can call the treasurer's office (at that time) and do what they call a payment by legal, to pay for your portion, or the association could collect from everyone and pay it.

Hope this helps,

Paul Garver
Attorney at Law
3 votes
Paul Garver, Other Pro, Hinsdale, IL
Fri Jan 29, 2010
Quick update to my answer... the first installment of Cook County taxes is now 55% of the previous year's tax bill. This just started with the first installment of 2009 taxes due in February of 2010.
Web Reference:  http://www.hg-legal.com
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Don Yosef Ma…, Agent, Highland Park, IL
Mon Jun 1, 2009
Dear Doungchul,m
First of all its incorrect about no tax's for two years. 2nd your tax's are not based at 1 1/2%-2% of the purchase price.Todate I have not seen this put in writing by any developer or assessor.
3rd The property is taxed from vacant land to fully improved land. This can take any where from 6 months to a few years it depends on when the unit/condo is report for it final occupancy permit. Then it is prorated the first year depending when the condo was finished. So it can take up to several years before it is fully assessed,but the tax's are always due each year and the developer has to pay his portion that he owned the unit /property for. Your amount is not due until the following year unless the developer gave you a credit at the closes for the tax's that are/were due. Usually the following year after you have lived there the tax bill will be prorated through your attorneys or a separate escrow account or on the good words between the attorneys.
0 votes
Shirin Rezan…, Agent, Chicago, IL
Fri Apr 3, 2009
Hi Dongchul Yoo,

Maybe what the seller was telling you that taxes for one year are paid in the following year at the county where his property is located. Check with the seller if this is what he meant. You should also check with your Real Estate Attorney before you engage in a transaction. Best of luck!


Shirin H. Rezania
Realtor ®
2008 Premier Service ® Diamond Award
Koenig & Strey GMAC
900 North Michigan Avenue, Suite 1700
Chicago, Illinois 60611
email: srezania@ksgmac.com
direct: 312.893.8129
cell: 312.493.7983
e-fax: 866-324-4369
0 votes
Christopher…, Agent, Chicago, IL
Fri Apr 3, 2009
Dear Dongchul,

You should anticipate that your annual real estate taxes in Cook County will range from between 1.5-2% of the purchase price of the property per year.

Let me know if you need any additional information.

Christopher Thomas
Broker Associate, Sudler Sotheby's International Realty
773-418-0640 (cell)
0 votes
Jeanne Wheel…, Agent, SEBRING, FL
Fri Apr 3, 2009
It would be best to check with the county you are located in to give you an estimate of the taxes. Each state and area property located in are different and maybe in a city or district which may levy additional taxes. Tax authority should give you the estimate and your realtor can best direct you to the proper entity.
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