Connecting the Dots:Homestead Exemptions to Tax Bills

Property Taxes Made SimpleProperty Tax Advisory Committee

Illinois ConstitutionArticle 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

Valuation Procedures• Property Tax 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.

Cook Co. Valuation Procedures

• Code of Ordinances: Section 74-64: Market Value Percentages

10% of Market Value Vacant Residential Commercial

Apartment

25% of Market ValueCommercial Industrial

State Equalization ProcessProperty Tax 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.

Illinois Levy & Extension Process

Certification to County ClerkIncludes certified copy of budget & estimates of

Revenues

LevyPortion of taxing bodies revenues raised through the property tax

Taxing District Budget AdoptionTentative Budget• Public Notice and Hearing

County Clerk Timeline of 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

Illinois Levy & Extension Process

• Tax Base is the taxing bodies’ EAV• EAV is calculated less homestead

exemptions, TIF increment value, and newly assessed property

Exempt from Property Taxation

• 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.

CommercialResidential

(No exemptions)Residential

(No exemptions)Residential

(No exemptions)Market Value 200,000 200,000 200,000 200,000X Assessment Level 33% 33% 33% 33%Assessed Value 66,660 66,660 66,660 66,660X Equalization 1.0000 1.0000 1.0000 1.0000EAV 66,660 66,660 66,660 66,660Less Exemptions 0.00 0.00 0.00 0.00Taxable EAV 66,660 66,660 66,660 66,660Tax Rate 7.88% 7.88% 7.88% 7.88%Tax Bill 5,252.81 5,252.81 5,252.81 5,252.81Percent of Taxes to Market Value (Effective Tax Rate) 2.63% 2.63% 2.63% 2.63%

Total Levy Request $21,000Total Taxable EAV $266,640Tax Rate (Levy Request/Taxable EAV) 7.88%

Tax Rate Calculation

Hypothetical Taxing District (No Exemptions)

CommercialResidential

(No exemptions)Residential

(No exemptions)Residential

(No exemptions)Market Value 200,000 200,000 200,000 200,000X Assessment Level 25% 10% 10% 10%Assessed Value 50,000 20,000 20,000 20,000X Equalization 2.4240 2.4240 2.4240 2.4240EAV 121,200 48,480 48,480 48,480Less Exemptions 0.00 0.00 0.00 0.00Taxable EAV 121,200 48,480 48,480 48,480Tax Rate 7.88% 7.88% 7.88% 7.88%Tax Bill 9,550.56 3,820.22 3,820.22 3,820.22Percent of Taxes to Market Value (Effective Tax Rate) 4.78% 1.91% 1.91% 1.91%

Total Levy Request $21,000Total Taxable EAV $266,640Tax Rate (Levy Request/Taxable EAV) 7.88%

Hypothetical Taxing District (Cook County)

Tax Rate Calculation

Commercial Residential A Residential B Residential C0%

1%

2%

3%

4%

5%

Hypothetical Taxing District without Exemptions

State of Illinois (excluding Cook County) Cook County

Properties of Equal Assessed Value

Eff

ecti

ve T

ax R

ate

Per

cent

Administration of Homestead Exemptions

The Chief 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

Homestead Categories • Taxpayer Types:

• 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

Homestead Exemptions(Property Tax Code Article 15)

Community Stabilization Assessment Freeze Pilot Program Sec. 15-174 2015Natural Disaster Homestead Exemption Sec. 15-173 2012Returning Veteran’s Homestead Exemption Sec. 15-173 2012Senior Citizen Homestead Exemption Sec. 15-170 2009Long-Time Occupant Homestead Exemption Sec. 15-177 2007 (Cook)Homestead Exemption for Persons with Disabilities Sec. 15-168 2007Homestead Exemption for Veterans with Disabilities Sec. 15-169 2007Alternative General Homestead Exemption Sec. 15-179 2004 (Sunset)Senior Citizens Assessment Freeze Homestead Exemption Sec. 15-172 1993Veterans with Disabilities Sec. 15-165 1980General Homestead Exemption Sec. 15-175 1978Homestead Improvement Exemption Sec. 15-180 1975

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)

1975 1980 1985 1990 1995 2000 2005 2010 2015$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Exemption Amount Cook County

Year Exemption Approved

Exe

mpt

ion

Cap

GHE Exemption Amount History

Senior Citizen Homestead Exemption (SCHE) (35 ILCS 200/15-170)

• Current Provisions• Exemption Amount• Statewide EAV $5,000

• Who Qualifies?Owner claims property as his/her principal residence65 years or olderLeasehold interest

• Property TypesSingle FamilyCondominiumsCooperatives Life Care Facility (As defined in Section 15-170)

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

State of Illinois (excluding Cook County)Cook County

Year Exemption Approved

Exe

mpt

ion

Am

ount

SCHE Exemption Amount History

Removal of Homestead Exemption

• 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.

No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHEMarket Value 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000X 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 66,660X Equalization 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000EAV 66,660 66,660 66,660 66,660 66,660 66,660 66,660 66,660Less Exemptions 0.00 0.00 0.00 0.00 0.00 6,000.00 0.00 11,000.00Taxable EAV 66,660 66,660 66,660 66,660 66,660 60,660 66,660 55,660Tax 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 4,681.01Percent 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 $21,000Total 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

No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHE No HE(s) GHE + SHEMarket Value 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000X 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 20,000X Equalization 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240 2.4240EAV 121,200 121,200 48,480 48,480 48,480 48,480 48,480 48,480Less Exemptions 0.00 0.00 0.00 0.00 0.00 7,000.00 0.00 12,000.00Taxable EAV 121,200 121,200 48,480 48,480 48,480 41,480 48,480 36,480Tax 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 3,093.50Percent 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 $21,000Total 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

Commer

cial

(N

o Exe

mption

s)

Reside

ntial

A

(No E

xempti

ons)

Reside

ntial

B

(GHE)

Reside

ntial

C

(GHE &

SCHE)$0

$2,000$4,000$6,000$8,000

$10,000

Hypothetical Taxing District in Illinois(excluding Cook County)

Without Exemptions Exemptions

Properties of Equal Assessed Value

Tax

Bil

l

Commer

cial

(N

o Exe

mption

s)

Reside

ntial

A

(No E

xempti

ons)

Reside

ntial

B

(GHE)

Reside

ntial

C

(GHE &

SCHE)$0

$2,000$4,000$6,000$8,000

$10,000

Hypothetical Taxing District in Cook County

Without Exemptions Exemptions

Properties of Equal Assessed Value

Tax

Bil

l

Removal of Homestead Exemptions from Rate

Calculation• Tax Base erosion varies by county.

• Cook: Tax Base erosion varies by township.

Discussion