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HE for legislatures 2.0
- 1. Connecting the Dots: HomesteadExemptions to Tax Bills Property Taxes Made Simple Property Tax Advisory Committee
- 2. Illinois Constitution Article 9:Section 4 • Real Property Taxation • (a) Taxes upon real property shall be levied uniformly by valuation ascertained as the General Assembly shall provide by law. • (b) Counties with populations of 200,000+ may classify property. Provided that the assessments are uniform and do not exceed 2 ½ times the level of assessment of the lowest class in that county. • Includes counties: Madison, Champaign, Winnebago, and St Clair, but only adopted in Cook
- 3. Valuation Procedures • PropertyTax Code: Sec. 9-145. Statutory level of assessment. Except in counties with more than 200,000 inhabitants which classify property for purposes of taxation, property shall be valued as follows: (a) Each tract or lot of property shall be valued at 33⅓ % of its fair cash value. (b) Each taxable leasehold estate shall be valued at 33⅓ % of its fair cash value.
- 4. Cook Co. ValuationProcedures • Code of Ordinances: Section 74-64: Market Value Percentages 10% of Market Value Vacant Residential Commercial Apartment 25% of Market Value Commercial Industrial
- 5. State Equalization Process PropertyTax Code: Sec. 17-5 • Equalization among counties. The Department shall act as an equalizing authority. • It shall examine the abstracts of property assessed for taxation in the counties and in the assessment districts in counties having assessment districts…and shall equalize the assessments between counties • The Department shall lower or raise the total assessed value of property in each county, other than property assessed under Sections 10-110 through 10-140 and 10-170 through 10-200, so that the property will be assessed at 33 ⅓ % of its fair cash value.
- 6. Illinois Levy &Extension Process Certification to County Clerk Includes certified copy of budget & estimates of Revenues Levy Portion of taxing bodies revenues raised through the property tax Taxing District Budget Adoption Tentative Budget • Public Notice and Hearing
- 7. County Clerk Timelineof Billing Apportionment percentages are calculated for overlapping county taxing districts Certification of taxing district levies Illinois Dept. of Revenue certifies final county equalization factor State assessed properties are complete for tax year Board of Review finalizes assessments
- 8. Illinois Levy &Extension Process 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒 = 𝐿𝑒𝑣𝑦 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 • Tax Base is the taxing bodies’ EAV • EAV is calculated less homestead exemptions, TIF increment value, and newly assessed property
- 9. Exempt from PropertyTaxation • Illinois Constitution Article 9: Section 6 • The General Assembly by law may exempt from taxation only the property of the State, units of local government and school districts and property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery and charitable purposes. The General Assembly by law may grant homestead exemptions or rent credits.
- 10. Commercial Residential (No exemptions) Residential (No exemptions) Residential (Noexemptions) Market Value 200,000 200,000 200,000 200,000 X Assessment Level 33% 33% 33% 33% Assessed Value 66,660 66,660 66,660 66,660 X Equalization 1.0000 1.0000 1.0000 1.0000 EAV 66,660 66,660 66,660 66,660 Less Exemptions 0.00 0.00 0.00 0.00 Taxable EAV 66,660 66,660 66,660 66,660 Tax Rate 7.88% 7.88% 7.88% 7.88% Tax Bill 5,252.81 5,252.81 5,252.81 5,252.81 Percent of Taxes to Market Value (Effective Tax Rate) 2.63% 2.63% 2.63% 2.63% Total Levy Request $21,000 Total Taxable EAV $266,640 Tax Rate (Levy Request/Taxable EAV) 7.88% Tax Rate Calculation Hypothetical Taxing District (No Exemptions)
- 11. Commercial Residential (No exemptions) Residential (No exemptions) Residential (Noexemptions) Market Value 200,000 200,000 200,000 200,000 X Assessment Level 25% 10% 10% 10% Assessed Value 50,000 20,000 20,000 20,000 X Equalization 2.4240 2.4240 2.4240 2.4240 EAV 121,200 48,480 48,480 48,480 Less Exemptions 0.00 0.00 0.00 0.00 Taxable EAV 121,200 48,480 48,480 48,480 Tax Rate 7.88% 7.88% 7.88% 7.88% Tax Bill 9,550.56 3,820.22 3,820.22 3,820.22 Percent of Taxes to Market Value (Effective Tax Rate) 4.78% 1.91% 1.91% 1.91% Total Levy Request $21,000 Total Taxable EAV $266,640 Tax Rate (Levy Request/Taxable EAV) 7.88% Hypothetical Taxing District (Cook County) Tax Rate Calculation
- 12. 0% 1% 2% 3% 4% 5% Commercial Residential AResidential B Residential C EffectiveTaxRatePercent Properties of Equal Assessed Value Hypothetical Taxing District without Exemptions State of Illinois (excluding Cook County) Cook County
- 13. Administration of Homestead Exemptions TheChief County Assessment Officer (CCAO) administers and grants all homestead exemptions. Taxpayers have the right to appeal with Board of Review (35 ILCS 200/16-70) Further appeal through court system. • Guidance from Illinois Department of Revenue • State’s Attorney as County’s Legal Advisor
- 14. Homestead Categories • TaxpayerTypes: • Owner occupied • Senior • Disability • Veteran • Property Types: • Single family • Condo • Townhome • Duplex • Small Apartments, buildings up to 6 units (Cook County) • Mobile homes • Life care facilities • Cooperatives
- 15. Homestead Exemptions (Property TaxCode Article 15) Community Stabilization Assessment Freeze Pilot Program Sec. 15-174 2015 Natural Disaster Homestead Exemption Sec. 15-173 2012 Returning Veteran’s Homestead Exemption Sec. 15-173 2012 Senior Citizen Homestead Exemption Sec. 15-170 2009 Long-Time Occupant Homestead Exemption Sec. 15-177 2007 (Cook) Homestead Exemption for Persons with Disabilities Sec. 15-168 2007 Homestead Exemption for Veterans with Disabilities Sec. 15-169 2007 Alternative General Homestead Exemption Sec. 15-179 2004 (Sunset) Senior Citizens Assessment Freeze Homestead Exemption Sec. 15-172 1993 Veterans with Disabilities Sec. 15-165 1980 General Homestead Exemption Sec. 15-175 1978 Homestead Improvement Exemption Sec. 15-180 1975
- 16. General Homestead Exemption(GHE) (35 ILCS 200/15-175) • Current Provisions • Exemption Amount • Increase in EAV above the 1977 EAV up to maximum amount. • $7,000 Cook • $6,000 Rest of State • Who Qualifies • Owner his/her principal residence • Leasehold interest • Property Types • Single Family • Condominiums • Cooperatives • Life Care Facility (As defined in Section 15-170)
- 17. $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 1975 1980 19851990 1995 2000 2005 2010 2015 ExemptionCap Year Exemption Approved Exemption Amount Cook County GHE Exemption Amount History
- 18. Senior Citizen HomesteadExemption (SCHE) (35 ILCS 200/15-170) • Current Provisions • Exemption Amount • Statewide EAV $5,000 • Who Qualifies? Owner claims property as his/her principal residence 65 years or older Leasehold interest • Property Types Single Family Condominiums Cooperatives Life Care Facility (As defined in Section 15-170)
- 19. $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 1965 1970 19751980 1985 1990 1995 2000 2005 2010 2015 ExemptionAmount Year Exemption Approved State of Illinois (excluding Cook County) Cook County SCHE Exemption Amount History
- 20. Removal of HomesteadExemption • Examples of Taxing Districts rate calculations • “Zero sum game” • Simple rate change calculation examples with GHE and SCHE exemption scenarios as well as interaction with non-homestead property.
- 21. No HE(s) GHE+ SHE No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHE Market Value 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 X Assessment Level 33% 33% 33% 33% 33% 33% 33% 33% Assessed Value 66,660 66,660 66,660 66,660 66,660 66,660 66,660 66,660 X Equalization 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 EAV 66,660 66,660 66,660 66,660 66,660 66,660 66,660 66,660 Less Exemptions 0.00 0.00 0.00 0.00 0.00 6,000.00 0.00 11,000.00 Taxable EAV 66,660 66,660 66,660 66,660 66,660 60,660 66,660 55,660 Tax Rate 7.88% 8.41% 7.88% 8.41% 7.88% 8.41% 7.88% 8.41% Tax Bill 5,252.81 5,606.11 5,252.81 5,606.11 5,252.81 5,101.51 5,252.81 4,681.01 Percent of Taxes to Market Value (Effective Tax Rate) 2.63% 2.80% 2.63% 2.80% 2.63% 2.55% 2.63% 2.34% Total Levy Request $21,000 $21,000 Total Taxable EAV $266,640 $249,640 6.4% Tax Rate (Levy Request/Taxable EAV) 7.88% 8.41% Hypothetical Taxing District (Combined) Tax Rate Calculation Commercial Residential No HE(s) Residential GHE Residential GHE + SHE
- 22. No HE(s) GHE+ SHE No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHE Market Value 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 X Assessment Level 25% 25% 10% 10% 10% 10% 10% 10% Assessed Value 50,000 50,000 20,000 20,000 20,000 20,000 20,000 20,000 X Equalization 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240 EAV 121,200 121,200 48,480 48,480 48,480 48,480 48,480 48,480 Less Exemptions 0.00 0.00 0.00 0.00 0.00 7,000.00 0.00 12,000.00 Taxable EAV 121,200 121,200 48,480 48,480 48,480 41,480 48,480 36,480 Tax Rate 7.88% 8.48% 7.88% 8.48% 7.88% 8.48% 7.88% 8.48% Tax Bill 9,550.56 10,277.76 3,820.22 4,111.10 3,820.22 3,517.50 3,820.22 3,093.50 Percent of Taxes to Market Value (Effective Tax Rate) 4.78% 5.14% 1.91% 2.06% 1.91% 1.76% 1.91% 1.55% Total Levy Request $21,000 $21,000 Total Taxable EAV $266,640 $247,640 7.1% Tax Rate (Levy Request/Taxable EAV) 7.88% 8.48% Commercial Residential No HE(s) Residential GHE Residential GHE + SHE Hypothetical Taxing District (Cook County) Tax Rate Calculation
- 23. $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 Commercial (No Exemptions) Residential A (NoExemptions) Residential B (GHE) Residential C (GHE & SCHE) TaxBill Properties of Equal Assessed Value Hypothetical Taxing District in Illinois (excluding Cook County) Without Exemptions Exemptions
- 24. $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 Commercial (No Exemptions) Residential A (NoExemptions) Residential B (GHE) Residential C (GHE & SCHE) TaxBill Properties of Equal Assessed Value Hypothetical Taxing District in Cook County Without Exemptions Exemptions
- 25. Removal of HomesteadExemptions from Rate Calculation • Tax Base erosion varies by county. • Cook: Tax Base erosion varies by township.
- 26.
Editor's Notes
- #2 Welcome! Feedback on test run through of a series of workshops on the Property Tax. The series is ‘Property Taxes Made Simple’. First is the relation between the main components of the property tax and homestead exemptions affect on tax bills. I’ll point out where there may be overlap with future presentations; for instance, Homestead Exemption Administration. There are parts of this presentation where I repeat some stories that I’ve told before in meetings or my classes. Indulge my repeating them!
- #3 Laying the groundwork; how real property taxation is addressed in the Illinois Constitution. Levied uniformly by valuation as the GA prescribes by law. Classification; Dawn Clark Netch story of how classification language was put into constitution. Cook and classification: Dejure vs Defacto assessing Old property record cards in Cook showing CDU factors.
- #4 How the GA enacted valuation procedures in statute. 33.33 % of value
- #5 Cook and classification: further Dejure vs Defacto assessing
- #6 Explain the reason for Cook’s multiplier greater than 1; closer to 2.5. for 2014 multiplier 2.7253
- #7 Dinner bill story.
- #10 Urban legend: Debate on tax shift to commercial.
- #11 This shows what the counties would be like without exemptions and how that affects the people living in the homes we assess. Essentially, this shows why exemptions are a necessary evil. The following Hypothetical Taxing Districts rate calculations are without considering Rate Limitations & PTELL, No Homestead Exemption removal and compares the State to Cook Co.
- #14 The Chief County Assessment Officer (CCAO) is prescribed in statute to administer and grant all homestead exemptions. Some of the exemptions use the language, “chief county assessment officer shall determine the eligibility of property to receive the homestead exemption according to guidelines established by the Department” (35 ILCS 200/15-168). In keeping with statute, IDOR provides forms and correspondence to CCAOs used as guidelines for administration of homestead exemptions. However, the ultimate responsibility of the granting of homestead exemptions lies with the CCAO. Legal issues regarding homestead exemption are referred by the IDOR to the local county’s States Attorney. A taxpayer who has been denied any homestead exemption by the CCAO has the right to appeal that decision to the Board of Review. The Board of Review has the final authority on the granting of homestead exemptions (35 ILCS 200/16-70). The Property Tax Appeal Board does not hear complaints on homestead exemptions. Taxpayers can further appeal through courts.
- #17 The two homestead exemptions: GHE & SHE to illustrate the effect on tax bills.