The 2015 triennial re-assessment for City of Chicago property brings a huge increase to real estate assessments on the North and Northwest sides of the City. Although the median increase among the 184 city neighborhood areas is 10.4%, it would be a mistake to think that a 110% tax proration will provide a sufficient credit for all of your Buyers. Individually, the are some properties where the assessed value has increased nearly 50%!
If you have clients who are buying or selling real estate on the North or Northwest Side, especially in East Village, Ukranian Village, Streeterville, River North, Gold Coast, Bucktown, Wicker Park, Lake View, Logan Square, Lincoln Square or Lincoln Park, you need to know the impact of the increased assessments, which average more than 28%. Each property with an increased assessment can expect a similar increase in their property tax bill for 2015, payable in 2016. Missing this can cost your clients thousands when the 2015 and 2016 tax bills are issued (and cost you referrals and their future business)!
You can help protect your clients! First and foremost, you should refer your clients to an attorney that is familiar with and understands the impact of the new assessment. The very first thing your client’s attorney must do is obtain all assessment and exemption information for the property from the Cook County Assessor. This information provides crucial guidance for advising clients on the right tax credit to cover the 2015 and 2016 taxes. A Seller’s attorney must also be aware of any the changes, because he or she must be able to evaluate a request from a Buyer’s attorney for a larger than typical credit and advise the client accordingly. The issues get even more complicated where an assessment appeal is involved. Suffice to say, it is crucial for an attorney to be aware of and evaluate these issues, in order to pave the way for a smooth transaction.
Arm yourself with information! Undoubtedly, the question of real estate taxes comes up with most, if not all, of your clients before a contract is in place. Many clients may seem fixated on the issue of property taxes, and providing good advice on this issue will instill the client with confidence in your expertise. It is also important to set realistic expectations about this issue. Although having a reliable attorney available to answer difficult questions is an essential resource, you will find it handy to have additional resources on which to rely. The good news is that Cook County provides information online about real estate taxes and assessments that anyone can use!
There are two websites you can consult for information useful for property taxes:
Using the property PIN, you can obtain information about the current assessment, the previous assessment, exemption history and appeal history. If a substantial increase in the assessment is indicated, it is a good clue that the next tax bill will increase similarly. It is also good to know whether there are any exemptions applicable to the property. A senior exemption or freeze will keep the property taxes low and must be evaluated when dealing with property tax credits. You can use this information to better estimate the right proration for your contract.
This website aggregates information from several Cook County offices and provides a lot of good information for the real estate professional. In particular, the site shows the formula used for calculating the property tax bill for each property (assessment x state equalizer x tax rate – exemptions) and the numbers used for calculating the previous year’s bill. Using this formula, and the previous year’s figures, a relatively accurate estimate of the next tax bill can be determined by inserting replacing last year’s assessment with the new assessment.