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Did You Take Advantage of Property Tax Abatement? Your Next Tax Bill May Shock You

By Gary Smith
11/25/2020
Did You Take Advantage of Property Tax Abatement? Your Next Tax Bill May Shock You

Even if a property is fully paid for, tax payments never end. However, some cities offer property tax abatement, also called real estate tax abatement, which can provide savings and help with the resale value of the home.

What is Property Tax Abatement?

In Cook County, there are a variety of tax abatement programs meant to encourage private enterprises to develop urban areas.  These programs are often linked to job creation with the hope that economic growth, and therefore tax revenue, follows. These tax abatement programs are offered to commercial, retail, industrial, and nonprofit organizations.

These programs include:

  • Class 6(b) incentive: This is a 12-year reduction in real estate assessments. To qualify, a property must be used for industrial purposes and involve new construction, substantial rehab and/or re-occupancy of abandoned industrial property. This program reduces the standard 25% rate to 10% for the first 10 years, 15% for the 11th year, and 20% for the 12th year. This is renewable for an additional 12 years.
  • Class 7(a) and 7(b) incentive: This program applies to commercial projects in specific spots designated as Redevelopment Areas, Empowerment, or Federal Enterprise Zones. This provides a reduction in real estate assessments from 25% to 10% for the first 10 years, then 15% for the 11th year, and 20% for the 12th year.
  • Class 7(c) incentive: The Commercial Urban Relief Eligibility (CURE) program offers real estate tax incentives for commercial properties without requirements for location or minimum investment. Qualifying properties receive a three-year reduction in real estate assessments from 25% to 10 %. After that, it’s 15% for the fourth year, and 20% for the fifth year. Properties must involve new construction,  and substantial rehab and/or re-occupancy of abandoned commercial property.
  • Class 8 incentive: To qualify, property has to be in an area experiencing severe economic depression. The reduced rate is equal to that under the 6(b) incentive.
  • Class C property tax incentive: This is for properties that have substantial environmental contamination that requires remediation of a cost of more than $100,000 or 25% of the property’s market value. The reduced rate is equal to that under the 6(b) incentive.
  • Enterprise Zone Program: Chicago has designated six enterprise zones, which are eligible for a number of Illinois tax incentives, exemptions and other benefits.

There is an additional property tax incentive for properties designated as city landmarks.