You may receive a notice from the Assessor stating that your assessment is being reduced due to COVID but that may not mean a reduction in your tax bill. Why? Read the full Crain's article here.
UPDATED 11/19/2020 – If you are not a Crain’s member, Alby Gallun, the author of the article, also was interviewed in a podcast. You can click here to listen.
Leading Lawyer magazine names Elliott & Associates partner Mike Elliott #5 Real Estate Tax attorney in Illinois and #3 in the Suburban Real Estate category.
Super Lawyers selects Elliott & Associates attorney Lauren Elliott to the Illinois Super Lawyer Rising Star list for the second year In a row.
Do you own commercial or industrial property in Cook County? You may be eligible for an incentive with substantial tax benefits.
How do the Cook County Tax incentives work?
Cook County offers tax incentives to owners of commercial and industrial property. These incentives reduce taxes by 60% for 10 years and gradually increase back to market in years 11 and 12. Here’s how they work.
The most common incentives are known as Class 6b (industrial property) and Class 8 (commercial and industrial property). They apply when property owners build new buildings, substantially rehabilitate or expand existing buildings and re-occupy vacant buildings (referred to as “abandoned property” in the law). For commercial properties, Class 8 also requires that the property be located in a blighted area. Class 6b does not include the blight requirement.
Recent modifications to the law have relaxed the vacancy requirement and allow industrial businesses who have operated in the same location for 10 years or more and can demonstrate an economic hardship to obtain an incentive. As a result of these changes, more properties will qualify for these incentives.
If property has been vacant long enough, the ordinance considers it “abandoned property” and incentives may apply. Over the years, the definition of abandoned property has been expanded several times. Recent changes to the law have continued the expansion allowing more taxpayers to take advantage of the vacancy provisions.
Under recent changes to the law, “abandoned property” includes:
The term “special circumstances” is not defined in the County ordinance, but typically means the property possesses some negative attribute (such as functional or economic obsolescence) that would justify granting the incentive. The finding of special circumstances must be made by the municipality or the Cook County Board (if the property is in an unincorporated area). Furthermore, the governmental officials may incorporate a “but-for test” meaning they may not support granting the incentive unless the taxpayer proves that the construction project or re-occupancy will not occur unless the incentive is granted.
Applications for exemption under the TEERM program must be filed by November 30, 2018 and are not renewable.
Industrial Properties Without Vacancy
Prior to the recent changes in the law, occupied industrial properties were not eligible for Class 6b incentives. Under recent changes, however, occupied industrial properties may obtain an incentive under a program known as Class 6b SER Program if the municipality or County Board concludes a financial hardship exists and the business is not viable without the incentive. The specific requirements of the SER Program are as follows:
The incentive under the SER Program is not renewable.
 The term “blighted area” means an area “certified as in need of substantial revitalization” under the Cook County Classification Ordinance. This includes all properties located in Bloom, Bremen, Calumet, Rich and Thornton Townships and any property acquired through the Cook County Tax Reactivation Project.
You filed an appeal on my property and the assessment was reduced, buy my tax bill is higher than last year. Where are the savings?
When your assessment is reduced because of a tax appeal, your taxes before exemptions will always be less than what they would have been had there been no reduction. You cannot see the savings by comparing this year’s bill to last year’s bill. You see the savings by comparing this year’s bill to the bill you would have received had your assessment not been reduced.
Your taxes are determined by the: assessed value, state equalization factor, and local tax rate.
Months before you received your bill, the Assessor placed an assessment on your property. In a reassessment year, an assessment notice was mailed to you.
You contested that assessment and caused it to be reduced. The reduced assessment appeared on your tax bill and was used to compute your taxes.
But, since you won your appeal, you never saw the bill that would have been issued had the original assessment not be lowered.
The bill you received included the reduced assessment and not the original Here’s what an actual tax bill looks like and what the bill would have looked like had there been no assessment reduction.
As you can see, the actual tax was lower than the tax that would have been billed had no reduction been obtained. That’s the savings.
There are several factors that could have caused this year’s real estate tax bill to be greater than last year’s.
The tax savings that you realize because of an assessment appeal is the difference between the actual taxes billed and the taxes that would have been billed had no reduction been obtained. It is not the difference between this year’s taxes and last year’s taxes.
If Elliott appeals my assessment and wins, will my tax bill be less than last year?
Not necessarily. But, in nearly all cases, if we file a tax appeal for you and win, your taxes will be less than otherwise and you will save money.
Your taxes are based on:
If the originally proposed assessment were reflected on your bill, your taxes (before exemptions) would be higher.
The difference between the taxes based on the original assessment and the final one because of the appeal we filed is the tax savings.
Your tax bill following a successful appeal could be more or less than the prior year. Why?
The savings you realize from a tax appeal is not computed by comparing this year’s bill to last year’s because there are other factors that change from year to year that affect your bill. The savings you realize from a tax appeal is the difference between the taxes you would have owed had no appeal been filed and the taxes you will owe following the appeal.
Elliott & Associates is pursuing a tax appeal for me. Should I pay my tax bill?
Yes, you should pay your tax bill even though you have an appeal pending. Here’s how the appeal process affects your tax bill.
In Illinois, property taxes are paid in arrears. That means taxes for a particular year are paid the next year.
In Cook County, taxes are payable in two installments. The first installment is 55% of the prior year’s tax bill and is basically a down payment on what you will eventually owe for this year. So, you need to pay your 1st installment bill regardless of whether a tax appeal is pending.
After all appeals have been concluded, 2nd installment tax bills will be computed and issued. The 2nd installment bills are usually mailed around July 1st and due August 1st. The 2nd installment bill will reflect any assessment reduction we obtain for you. If your assessment is reduced, your 2nd installment bill will be smaller than otherwise.
Your 2nd installment bill will include a credit for the amount you paid for the 1st installment and you will be billed for the balance due.
Outside of Cook County, tax bills are not issued until all appeals have been concluded. Then, the taxes are computed and will reflect any assessment reduction we obtain for you. The bills are usually mailed in mid-April and payable in two installments of 50% each. There is no estimated 1st installment bill as there is in Cook County.
So, regardless of whether your property is located in Cook County or elsewhere, you must pay each tax bill when it due regardless of whether a tax appeal is pending. If you fail to do so, interest will accrue at the rate of 1-1/2% per month.
Why does my tax bill rise each year?
Tax bills can rise over time even when you diligently contest your assessment. But, if you don’t contest your assessment, the tax increases will be even greater.
Property taxes are directly impacted by local government spending. If you review your tax bill, you will see all the governmental agencies that levy a tax on your property.
The more these agencies spend, the greater the tax they take from property owners like you.
The amount government takes from you is reflected on your tax bill in the tax rate. The higher the spending, the higher the tax rate and the more you will owe.
Many governmental agencies are limited by law as to how much they can take from property owners each year. These limitations are known as tax caps. Tax caps limit tax levies from increasing from year to year by more than the rate of inflation ---which has been about 2% to 3% per year recently.
But, other agencies are not limited by tax caps and they can take whatever amount they wish.
In the final analysis, you can expect tax levies to increase at least 2% to 3% each year because of increases in government spending.
So, even if you keep your property assessment under control, increases in spending could cause your tax bill to grow over time.
But, if you don’t contest your assessment, the situation will be even worse as a higher tax rate will be applied to a higher assessment causing an even higher tax bill.
How is my tax bill calculated?
Your tax bill is based on your current assessment, current equalizer, current tax rates and any exemptions you are entitled to as a homeowner.
Here’s how the bill is computed:
Why did I get a one-year assessment reduction?
Assessment reductions are generally awarded for multiple years. But, occasionally they may be awarded for one-year only. And, that is not necessarily a bad thing. Here’s how one-year reductions work and why they may actually be a good thing.
Property in Cook County is assessed triennially, meaning once every 3rd year. Once an assessment is reduced, that reduction will typically remain in place for all 3-years of the assessment cycle.
Outside of Cook County, property is assessed quadrenially, or every 4th year and any reduction should benefit the taxpayer for the remainder of the assessment cycle, and maybe longer. That’s because the Assessor adjusts assessments each year by a percentage called a factor. Factors reflect changes in real estate values in the local community. So, when an assessment reduction is awarded one year, it carries forward to all future years of the same assessment cycle because the factor is applied to the reduced assessment rather than the originally proposed/higher one.
In Cook County, the Assessor and Board of Review sometimes mark their reductions as one year only. In those cases, the assessment the following year will be increased to the original level (before the reduction) and the taxpayer will need to appeal again.
The Cook County assessing officials tend to issue one-year reductions when property has
One-year assessment reductions can be substantial and the assessment will often be reduced well below the level of the prior year.
The assessing officials tend to award one-year reductions to help taxpayers who are suffering financially. But, they require the taxpayer to appeal again the following year to prove the hardship continues to exist.
Multi-year reductions, on the other hand, tend to be less dramatic. Usually, an assessment increase is reduced or eliminated and the reduction will carry forward to the rest of the assessment cycle.
One-year assessment reductions often occur in Cook County. And, are a good thing because the assessment is often reduced much more than it would have been had a multiple year reduction been awarded.