What Do I Need to Know to Navigate Cook County Tax Code?

A Guide for Real Estate Investors

Even for experienced investors, comprehending Cook County’s tax code can be daunting. This comprehensive guide, written with the help of the experts at HomeVestorsⓇ—the largest network of independently owned and operated real estate franchises in the country—is intended to help you understand when and how the County will tax your investment property, and what you can do to minimize your tax burden while maximizing your ROI. If you’re a new investor, you can pair this guide with advice and mentorship from experts in the field to ensure that you are setting yourself up for success.

I’m Looking to Invest In Chicago—What’s the Current Landscape?

Chicagoland homeowners—and residential real estate investors—noticed something nasty in their second installment tax bills in 2016. Mayor Rahm Emanuel and the Chicago City Council approved the largest property tax hike in modern history. Owners of residential real estate already saw the increase, about $300 for a $250,000 home, reflected on their August 2016 tax bills, and will see further increases over the next three years. That’s on top of previous increases shown below.

2014 Average Tax Rate12015 Average Tax Rate1% Change2014 Average Tax Bill22015 Average Tax Bill2$ Change% Change
Chicago6.808%6.867%+0.9%$3,220.32$3,633.19+$412.87+12.8%
North Suburbs10.231%10.649%+4.1%$6,575.16$6,685.55+$110.39+1.7%
South Suburbs13.054%13.662%+4.7%$4,885.07$4,986.22+$101.15+2.1%
2013 Average Tax Rate12014 Average Tax Rate1% Change2013 Average Tax Bill22014 Average Tax Bill2$ Change% Increase
Chicago6.83%6.81%-0.3%$3,237.11$3,326.55+$89.44+2.8%
North Suburbs10.14%10.23%+0.9%$6,388.60$6,544.09+$155.49+2.4%
South Suburbs12.51%13.05%+4.3%$4,901.56$4,850.23-$51.33-1.0%

For residential real estate investors, these tax hikes can make or break a potential investment, especially as any improvements or repairs made to the property can affect tax rates. With significant capital on the line in every residential real estate investment, it is imperative for investors to understand when, how, and by whom they are taxed. This guide is your first step to informing yourself about these issues, and when you’re ready to take the next step, contact HomeVestors to get in touch with our experienced Development Agents, who can give you the on-the-ground advice you need to turn your tax burdens into benefits.

Cook County Real Estate Tax Burdens

You’ll owe two types of taxes if you hold or sell property in Cook County.

Property Tax:

  • You’ll owe property tax in Cook County based on how long you hold the property.
  • The tax burden will be split between the buyer and seller in the year that it changes hands, prorated to the date of transfer as noted on the Cook County Real Estate Transfer Declaration.
  • If you both purchase and sell a residence in the same year, the tax burden on the property will be split three ways.

Transfer Tax:

  • Transfer tax is due at the time of sale.
  • In Cook County, this burden falls on the seller. This tax should be accounted for in your closing costs, and reflected on your closing cost net sheet.
  • Tax calculators provide an estimate of how much transfer tax is due, but it is best to consult a real estate attorney or certified tax expert to determine exactly how much your transfer tax will be.

Let’s break it down. We know that taxes will be due, but when must they be paid? What is the payment process? How much will you owe? How is that determined? Are you eligible for any exemptions? Can you appeal a tax assessment? How are refunds handled? and Where can you find qualified advice and assistance?

Due Dates

The due date for the Tax Year 2016 First Installment is Wednesday, March 1, 2017.

In Cook County, the due date for First Installment property taxes is always the first business day in March. According to Illinois law, the First Installment taxes are 55% of the prior year’s total tax (or 55% of the adjusted tax if an assessment certificate of error is certified by the previous November 30).

The tentative due date for the Tax Year 2016 Second Installment is August 1, 2017.

The Second Installment due date varies year to year. This is because the Second Installment bill relies on the delivery of various sets of data by other state and county agencies. Unlike the First Installment bill, the Second Installment bill reflects the new assessed values, assessment appeals, exemptions, state equalization factor, and taxing-district tax rates.

Delinquent property tax notices for the Tax Year 2015 were mailed on February 2, 2017.

Should the delinquent amount not be paid, the sale of delinquent tax debt will begin on April 3, 2017. To find out if your property taxes are delinquent, you can search for your property by Property Index Number (PIN) or address here.

Payment Process

Under the leadership of Maria Pappas, Cook County Treasurer, property taxes can be paid in a number of convenient ways. Whichever method you choose to use, you will need your PIN, which you can locate on your property deed, on your closing documents, on your mailed tax bill, or by searching by address on the Cook County website. Payments can be made:

  • Online through the Cook County website. Online payments can be made on your computer, tablet, or smartphone.
  • By mailing a payment coupon and check to:
    • Cook County Treasurer
      PO Box 805438
      Chicago, IL 60680-4116

Be certain to include on the check your name, PIN, property location, mailing address, telephone number, email address, and tax year and installment. Separate checks and payment coupons are required for each property.

With so many options, it can be hard to decide which is the most convenient. For advice, you can ask your HomeVestorsⓇ Development Agent which method has worked best for them.

Tax Rate Calculation

Between seven and 20 taxing districts levy taxes on Cook County residences. Your tax rate will depend on which districts claim your property. Information on which districts claim your property in their jurisdiction is located on the front of your mailed tax bill, below the amount owed, in a section titled “Taxing District Debt and Financial Data.” That section lists the following financial information about each district:

  • Money Owed by Your Taxing Districts
  • Pension and Healthcare Amounts Promised by Your Taxing Districts
  • Amount of Pension and Healthcare Shortage
  • Percentage of Pension and Healthcare Costs Taxing Districts Can Pay

Assessments

Your tax rate is applied to the assessed value of your property. The Cook County Assessor’s Office is responsible for assigning a fair market value to your property. Instead of assigning the 1.8 million properties in their area individual market values, the assessor uses a mass appraisal system on a rolling basis. The Assessor evaluates one-third of all properties each year, alternating between the northern suburbs, the city proper, and the southern suburbs, so each area is given a new appraisal once every three years.

Using a multiple regression analysis, the assessor creates a sales comparison average between similar properties. To do so, the assessor meets with local elected officials, community leaders, real estate professionals, and other citizens knowledgeable about real estate in the area. With this knowledge, they can then define neighborhoods with similar housing types and sales prices. Therefore, the best way to estimate what your property tax assessment value will be to search for similar properties to identify their value and compare historic tax rates. If you’re a real estate investor in the HomeVestorsⓇ network, this process is simplified with the proprietary ValueChekⓇ software, which includes a built-in property comparison feature.

Exemptions

The Cook County Assessor’s Office offers a number of exemptions which can help reduce your tax bill. Exemptions are available for:

Homeowners

The property must be the homeowner’s primary place of residence during the tax year.

Senior Citizens

Eligible persons must be 65 years of age or older; responsible for real estate taxes through ownership, lease, or contract; and claiming the house as their primary residence

Senior Freeze

This freezes the equalized assessed value (EAV) of their property for the year before they qualify for this exemption.

Home Improvement

Homeowners may increase the value of their home by investing in improvements with a value of up to $75,000 without an increase in their property taxes for at least four years. This is an important exemption for investors renovating properties for resale. Ask your HomeVestorsⓇ Development Agent which improvements they’ve made in the past that qualified for exemptions.

Repairs are not necessarily improvements. Consult the Cook County Assessor’s Office to see if your planned renovations qualify for this exemption. Again, your mentor can help with this as well.

Longtime Homeowners

Homeowners must have owned the property for a period of at least 10 years. While this is unlikely to apply to investors renovating home to quickly sell, investors who have been renting their properties for a minimum amount of time may qualify.

Returning Veterans Exemption

Veterans are eligible for up to a $5,000 reduction in EAV the year they return.

Disabled Veterans Exemption

Veterans with service-connected disabilities may be eligible for reductions in their EAV.

Disabled Persons Exemption

Disabled persons may be eligible for a $2,000 annual reduction in their EAV.

Let’s Begin

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