The city of Chicago will begin the phase-out of the 7 percent tax cap on property assessment increases – a break created during the real estate boom to control the steep property tax hikes. The north suburbs will begin the phase-out next year, and the south suburbs in 2015.
How Much Will the 7 Percent Tax Cap Affect Us?
The 7 percent tax cap was created 10 years ago to help homeowners in gentrifying neighborhoods, where property values and tax bills rapidly increased as a result. However, since home values and assessments dramatically decreased due to the market, the cap no longer serves its purpose. Unless you live in a prosperous area of the city, the cap won’t mean much to you when tax bill time comes along.
“The average homeowner won’t see a change [in their tax bill] as result of the 7 percent cap going away,” Laurence Msall, with the Civic Federation (which keeps an eye on taxation and spending by local governments), told the Chicago Sun-Times. “Because of the decline in residential – and really all property values – people’s property tax values aren’t being impacted by assessed value.”
Msall did tell the Sun-Times that tax bill continue to rise because, “the government levies continue to grow – limited only by inflation.” And Cook County Assessor Joe Berrios also said that once a break such as the 7 percent tax cap is taken away, property taxes will naturally increase. However, he said the effects of the cap will definitely not be as affective as they used to be.
Berrios “Softens the Blow” of Losing the Tax Cap
The Sun-Times reports that out of 640,000 residential properties on the books in Chicago, two-thirds of those owners take advantage of some type of tax break. And half of those owners took advantage of the break provided under the 7 percent tax cap. The assessor’s office says that while no comparative data was available, the number represents a consistent drop in those homeowners able to take advantage of the deal.
While homestead and senior exemptions remain on the books, Berrios wants to boost the benefits in Springfield to “soften the blow” of losing the 7 percent tax cap. Berrios wants homeowners to receive a $7,000 exemption in equalized assessed value on their property (instead of the current $6,000), and seniors to receive a $5,000 added exemption (instead of $4,000).