If you're considering buying a home in Illinois, understanding the intricacies of property taxes is essential. As one of the most significant ongoing expenses for homeowners, property taxes can impact your monthly budget and long-term financial plans.
For new homeowners, navigating the property tax system might feel daunting, but with the right information, you can make informed decisions.
In this blog, we’ll break down everything you need to know about property taxes in Illinois, including how they’re calculated, why they’re important, and how to manage them effectively as a new homeowner.
What Are Property Taxes?
Property taxes are levies imposed by local governments, such as counties, municipalities, and school districts, to fund public services. These include schools, libraries, road maintenance, public safety, and more.
In Illinois, property taxes are based on the assessed value of your property and the tax rate set by your local taxing authority.
How Are Property Taxes in Illinois Calculated?
The calculation of property taxes in Illinois involves two main components:
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Assessed Value: This is determined by your local assessor, who estimates the market value of your property and applies an assessment percentage. In Illinois, residential properties are typically assessed at 33.33% of their fair market value.
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Tax Rate: This is determined by the local taxing bodies and represents the percentage of your property’s assessed value that you owe in taxes.
For example, if your home is valued at $300,000 and the assessed rate is 33.33%, your home’s assessed value is $100,000. If your local tax rate is 7%, your annual property tax bill would be $7,000.
What Factors Affect Property Taxes in Illinois?
Several factors influence your property taxes, including:
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Location: Different counties and municipalities in Illinois have varying tax rates. For example, suburban areas may have higher rates to support school systems and infrastructure.
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Home Value: The assessed value of your property is tied to its market value. Renovations or upgrades can increase your home’s market value, potentially raising your tax bill.
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Exemptions: Illinois offers various property tax exemptions that can lower your tax liability. Common exemptions include:
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Homestead Exemption: Available to homeowners who live in their property as their primary residence.
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Senior Citizens Exemption: Provides tax relief to homeowners aged 65 or older.
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Disabled Persons or Veterans Exemption: Reduces taxes for individuals with disabilities or qualifying veterans.
When Are Property Taxes Due in Illinois?
Property taxes in Illinois are typically paid in two installments. The due dates vary by county but are often in June and September. Homeowners receive a tax bill outlining the total amount owed, payment deadlines, and acceptable payment methods.
Why Are Illinois Property Taxes Notoriously High?
Illinois is known for having some of the highest property taxes in the country. This is due to several factors:
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Heavy Reliance on Property Taxes: Illinois heavily depends on property taxes to fund local services, particularly education.
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Fragmented Taxing Bodies: The state has numerous local governments, each with its own tax levies.
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Limited State Funding: Compared to other states, Illinois provides less state funding for schools and infrastructure, shifting more of the financial burden onto property taxes.
How to Appeal Property Taxes in Illinois
If you believe your property taxes are too high, you can appeal the assessed value of your property. Here’s how:
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Review Your Tax Bill: Check your bill for errors in the assessed value or property description.
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Research Comparable Properties: Compare your property’s assessment to similar homes in your area to determine if it’s in line with market trends.
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File an Appeal: Submit an appeal to your local Board of Review. Be prepared to provide evidence supporting your claim, such as appraisal reports or recent sales data for comparable properties.
Critical Tips for New Homeowners to Manage Property Taxes
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Understand Your Escrow Payments: If you have a mortgage, your lender may include property taxes in your monthly escrow payments. This ensures taxes are paid on time, but make sure you understand how much is allocated for taxes.
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Apply for Exemptions: Take advantage of all applicable exemptions to lower your tax burden. Reach out to your local assessor’s office for guidance.
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Budget for Annual Increases: Property taxes can rise annually due to reassessments or increased tax rates. Plan your budget to accommodate potential increases.
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Stay Informed: Keep up-to-date with changes in local tax rates and policies that could affect your bill.
How The Hampton Collective Can Help
At The Hampton Collective, we understand that property taxes can be a significant concern for new homeowners. Our team of real estate experts is here to help you:
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Understand Local Tax Rates: We’ll guide you through the tax implications of purchasing a home in your preferred neighborhood.
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Identify Cost-Effective Locations: We can help you find areas with competitive property tax rates while meeting your lifestyle needs.
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Provide Ongoing Support: Even after your purchase, we’re here to assist with any questions or challenges related to property taxes.
Why Knowledge of Property Taxes Is Essential
Understanding property taxes in Illinois is crucial for first-time homebuyers to avoid surprises and make informed decisions.
From knowing how they’re calculated to exploring ways to reduce your tax bill, being proactive can save you money and reduce stress in the long run.
If you’re ready to explore the Illinois housing market or have questions about property taxes, contact The Hampton Collective today.
Let’s find your dream home—and ensure you fully understand the financial responsibilities that come with it.