Property Taxes: Know Your Clients’ Rights

by Chicago Agent

By Peggy Kayser, CAE, CIPS, RCE
Chief Executive Officer
Realtor Association of NorthWest Chicagoland

As someone whose job it is to help people become homeowners, you have a responsibility to make sure your clients know what that title entails. From mortgage payments to home improvements, finally calling a place “home” can be both exciting and overwhelming. With tax season around the corner, be sure your clients are aware of the impending property taxes.

For first-time homeowners, you can explain property taxes simply as 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. This information isn’t required to come from Realtors, but we should make the effort to prepare our clients for any and every result of the purchase we are helping them make.

“Property taxes are used to finance the majority of services provided to citizens within a community,” says 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 their clients’ property rights. Consumers should be educated about the property tax process so that they not only know where their money is allocated, but know their rights as well.”

The first step in getting your client’s property value properly assessed is getting them to understand the tax cycle. Typically, the property tax cycle in Illinois lasts two years. During the first year, a home’s value is estimated and reviewed. The second year, the owner is billed for the taxes for the previous year, usually paid in two installments. For example, this year a homeowner would pay taxes on assessments made in 2007.

The 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 33 1/3 percent of this market value. To make sure these evaluations are done correctly, your client can compare the assessed value given to them with similar homes in the neighborhood.

“Assessors try to keep values accurate within different areas, but as a homeowner it is your client’s responsibility to make sure they obtain a fair assessment,” says Orsi. “Local Realtors should be familiar with the fair market values of other properties in the area and help clients find comparable assessments.”

If your client is wondering why their property taxes have increased to a point past your original estimate, here are some possible reasons from information provided by YourIllinoisHome.com under “Financing” then “Property Taxes.”

• Property values in the area are increasing.

• Improvements were made to the property (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, let your clients know that they may also qualify for a property tax exemption depending on their situation. Here are a few from the Illinois Department of Revenue:

• General Homestead Exemption — Owners can qualify for this exemption if they occupy their property as primary residence on or before Jan. 1 of the tax year. They 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 — Applies to those 65 years of age and older who own and occupy the property as a principal residence.

• Senior Assessment Freeze — For seniors who are at least 65 years old and whose total household income is less than $55,000. This “freezes” the homet’s assessed value as long as the owner qualifies for the exemption.

• Homestead Improvement Exemption — Applies to those who add on to, remodel or rebuild their property 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/she returns to active duty.

“When your client purchases a home, it is important for them to find out the property tax amount that has recently been paid and if the previous owner’s tax bill included any exemptions,” says Orsi. “Some exemptions may apply to the new owner.”



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