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Are Your Property Taxes Breaking the Bank?

By Gary Smith
03/09/2018
Are Your Property Taxes Breaking the Bank?

Property owners experience sticker shock every three years in Cook County when they receive their readjusted tax bill in the mail, and another round of property tax hikes will continue to jolt residents and business owners in 2018. City of Chicago homeowners are receiving tax bills that have gone up an average of 12.8 percent and owners of higher priced homes and commercial properties might see even larger increases. The property tax increases have caused many to search for relief through a property tax appeal with the Cook County Assessor’s office and the Board of Review.

What do all those dollar amounts mean?

The tax bill is generated using data and calculations that cover a variety of taxing districts, including:

  • Municipal district
  • County district
  • High school district
  • Elementary school district
  • Park district

There are nearly 7,000 taxing bodies in Illinois, each with its own staff and costs. Each taxing district passes and files with the County Clerk a levy ordinance, which outlines how much revenue that entity seeks to collect from property taxes. That is translated into a percentage for each taxing body, and then those percentages are added together to create the composite tax rate.

That composite tax rate is then multiplied by the fair market value of each property, as determined by the Cook County Assessor. This is done by a computer-assisted mass appraisal system rather than by appraising each individual property.

The appraisal system’s computer model uses a variety of value components, including sales information of comparable properties, land, location, building square footage and construction type. However, the complications of each transaction, including the multiple components that may be included in the determination of purchase price in each real estate sale and the unique issues that may affect each transaction, leave any computer generated number subject to challenge.

One-third of Cook County get reassessed each year on a rolling basis, using the last three to five years of sales information. According to the Illinois Policy Institute, since 1990, Illinois residential property taxes have grown 3.3 times faster than the state’s median household income. As a result, the budgets of many Illinois home and business owners have been thrown into disarray and people are seeking relief through property tax appeals.

The dependency on appeals

Cook County, the second-largest county in the country, has a tax assessment process that relies on property tax appeals. According to the Cook County Assessor, half the residents who appeal their property taxes are successful.

In 2015, residential owners filed assessment appeals involving 370,000 parcels, winning a reduction 80 percent of the time. By most estimates, a similar or higher percentage of commercial, industrial and business properties reassessed in that year also obtained an assessment reduction when the appeal was filed by a lawyer.

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