When planning a home renovation project, it’s easy to overlook what could be your largest source of ongoing expense—the property taxes. Make sure to include a realistic estimate when planning a remodeling budget.
How Adding Square Footage Impacts Property Taxes
Illinois property taxes are the second-highest in the nation; however, according to data released in February 2020 by the Federal Housing Finance Agency, the average annual housing appreciation rate in Illinois has been 0.2% since the end of 2007.
When people are looking to buy a new home, they can turn to the Cook County Treasurer’s office website to see how much the property taxes are. This enables homebuyers to do a cost/benefit analysis on whether they can afford the home.
However, when renovating or building a house, the first estimate on property taxes might not be correct. A property often gets re-assessed once construction is complete. Taxes may be higher if the property wasn’t assessed correctly on the first year of paying taxes.
If work is in progress to upgrade the home, and square footage is added, it will likely increase the property tax bill.
There are some bills under consideration in Illinois that might eventually help with the high property taxes that residents must pay. For instance, HJRCA 38, which has been moving through the legislative process since 2020, would be a constitutional amendment that would allow for pension reform. This would include a later retirement age and a smaller cost-of-living adjustment.
For now, the best way to ensure that property tax bills in Cook County are correct is to ask for a reassessment on the value of the home. If there is a discrepancy in the property information or if the valuation is a lot higher than comparable properties in the area, a property tax appeal may be in order. There is no penalty if the county doesn’t agree with the need to reassess the property. This is something a property owner can ask for annually to try to lower the property assessment and, possibly, their tax bills.
Property owners should also ensure that the correct exemption paperwork has been filed—such as the primary residence exemption or the senior tax exemption—to receive those dollars off the property tax bill.