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A Perfect Real Estate Tax Storm is Brewing in Cook County

By Gary H. Smith
A Perfect Real Estate Tax Storm is Brewing in Cook County

By Gary H. Smith
Chicago and Cook County Property Tax Appeal Attorney
(Posted March 1, 2016)

If the evening news in Chicago had a tax forecast — similar to a weather forecast — the map could look pretty scary. A perfect storm is brewing and it will cost you.

You already received your first installment tax bill for the 2015 tax year. Illinois property tax bills are backward focused, as the Illinois tax system collects property taxes in arrears. Your first installment bill is “estimated” because it’s an estimate that is determined solely on what you paid for the previous year.

When the second installment bill arrives, you may be caught in what I call a “tax storm.”

The resulting “downpour” is a product of two simultaneous factors:

First, property assessments have been raised in many parts of the city of Chicago; and second, tax rates are going up at the same time. This double whammy is a rare occurrence.

Many of my clients are protected from the worst of the storm because my firm secured assessment reductions that all but eliminated one of the two major components of the tax story.

It’s important to know that the assessment is based on an estimate of your property’s value. The property tax that you pay is a function of your assessed value and the tax rate set by local governments.

Each year, the Cook County Assessor’s Office reassesses one-third of the nearly 1.8 million parcels of property located in Cook County. In 2015, the Assessor’s Office is reassessed all properties located in the City of Chicago.

The factors that create a Perfect Tax Storm

First, property values in Cook County are increasing. This has not gone unnoticed by the Cook County Assessor’s Office. Hundreds of thousands of Chicago property owners were notified of reassessments as high as 30, 40, 50 percent or more.

For example, in 2015, reassessment notices were mailed to more than 22,000 single family and 70,000 condominium homeowners in Lake View Township.

(The city, as well as the county, are divided into townships. Data for each township, including a map of the township’s boundaries, can be found on the Cook County Assessor’s website.)

The Assessor’s Office published these statistics from the 2015 reassessment of Lake View Township:

  • The median assessed value increased to 64,062 in 2015, from 59,235 in 2012 — a median percentage increase of 20.14%.
  • The median sale price for single-family homes and other non-condo residential properties increased to $640,000 in 2014, from $529,000 in 2012.
  • The proposed assessments of condominiums in Lakeview Township reflect a median increase of 16.69% in assessed value.

Many of the property owners for whom I filed appeals last year saw little to no increase in assessment, bucking the overall trend.

In 2015, property tax assessments were raised in every one of the eight townships located with the city of Chicago. (Data is from the Cook County Assessor, analyzed by Gary H. Smith.)

The 2016 reassessments of properties in Chicago’s north and northwest suburbs will reflect increases similar to what properties in the city of Chicago experienced last year.

The effect of political gridlock

The second factor in this Perfect Tax Storm, political gridlock in Springfield and long-term failure to solve the state’s pension crisis, is putting local governments in an unprecedented cash-strapped position. They are likely to raise their tax rates this year.

In a normal year, the assessment and the tax rate do not increase at the same time.

Not this year. What makes this year different is that in Chicago both the assessment and the tax rate are going up at the same time, creating the Perfect Tax Storm.

The Chicago City Council in 2015 passed the largest tax increase in its history. They increased their levy (proposed spending levels) by $500 million. That represents 10 percent of the total city budget.

If you live within the city of Chicago — with increasing assessments and increasing tax rates — you are going to get whacked.

What can you do to reduce your property taxes?

The most important thing is to very carefully review the reassessment notice you receive from the Cook County Assessor’s Office. If there is anything that is questionable, please contact the Law Offices of Gary H. Smith, P.C. as soon as you can.

We will file an appeal of your new assessment, helping to ensure that the amount of property tax you pay is fair. There are deadlines for filing appeals. If you are thinking about having an appeal filed, contact me today.

If you live in the north and northwest suburbs of Cook County, including Chicago’s north shore suburbs, you should contact my office immediately and we will begin working on your appeal.

If you live in the city of Chicago, you still can file an appeal for the next two years. Contact the Law Offices of Gary H. Smith, P.C. as soon as possible to get your appeal underway.