The word “freeze” may not be welcome on one of the coldest nights in Chicagoland, however for many elder adults born prior to 1948 and earning less than $55,000 / year, the “Senior Freeze Exemption” helps lower property taxes, and carries a significant financial impact. The following article was posted on the Palatine Township Assessor’s Office, and provides many answers on how increasing property values and property tax calculation changing will impact our future tax bills. Increasing taxes may make a significant difference if whether someone can continue to afford to stay in their home.
Source: Palatine Township Assessor Services. For More Information please go to: http://www.palatinetownship.com/assessor-services/
IMPORTANT NEWS . . . IMPORTANT NEWS
Property Values are going down…and Property Taxes are going up?!? In spite of the decline in property values over the last few years, property taxes will not be falling for most taxpayers. This is due to increases in government spending, declines in the value of the homeowner and longtime occupant exemptions, and the 2010 reassessment of Palatine Township property values.
Can I do anything to reduce my current tax bill? If you are eligible for a homeowner, senior citizen or other exemption but did not receive one, our office can assist you in obtaining your exemption. If you have received all exemptions for which you are eligible, you likely will not be able to do anything about your current bill.
Can I do anything to reduce future tax bills? Later this year, the Cook County Board of Review will be accepting appeals from Palatine Township residents for next year’s taxes. You can give us a call to add your email to our notification list.
Why aren’t property taxes going down when property values are going down? The main reason property taxes are not falling is that the cost of providing government services is not falling. Property taxes provide most of the funding for public schools and other local services. Typically, the cost of providing these services increases every year by about the rate of inflation.
Is every tax bill going to increase by the inflation-level increase in spending? No. Some properties will face double digit increases in their property taxes this year, while other properties will see smaller tax increases or tax reductions. When all the tax increases and reductions are added together, however, the net increase will match the inflation-level increase in tax levies.
Whose taxes are going up and whose taxes are going down? Because of changes in the homeowner exemption explained below, it is difficult to make general statements about the tax changes for most homeowners. The following are some general observations:
Seniors receiving the Senior Freeze exemption pay more. The Senior Freeze exemption provides special tax breaks for senior citizens with annual household income of less that $55,000. But the well-intentioned Freeze program does not cope with a declining real estate market very well. This is reflected in the fact that most seniors who have been on the program for a number or years will experience significant tax increases this year. Tax increases for seniors joining the program more recently will vary.
One might expect that a program called the Senior Freeze would freeze the taxes of senior citizens, but this is not the case. The program instead freezes the equalized assessed value of a senior’s property. When the frozen equalized assessed value is multiplied by a rising tax rate, the results is rising tax bills for Senior Freeze recipients.
The large tax increase for Senior Freeze recipients matches the large increases in the local tax rate. This higher tax rate insures that local government receives the revenue it needs to operate in the face of declining property values. But it will cause hardship for some seniors.
Residential properties with declining assessed values and minimal homeowner exemptions pay less. As explained below, most homeowners this year have smaller tax discounts under the homeowner exemption compared to last year. But residential property owners who are ineligible for a homeowners exemption, or who only received the minimum exemption last year, do not have to worry about declining homeowner discounts. Most such homeowners will see lower taxes this year.
Why is my tax discount for the homeowner or long time occupant exemption smaller than last year’s discount? In 2004, the legislature implemented a complicated new tax exemption known as the 7% assessment cap. The basic premise of the program was that the equalized assessed values of owner-occupied homes should not rise by more that 7% per year. Any increase above 7% was supposed to be tax exempt.
At the time the assessment cap was adopted, assessed values were rising rapidly because of what we now recognize as a “bubble” in the housing market. While the bubble was growing, homeowner exemptions were also growing. This large exemption sought to protect homeowners from large tax increases during those years.
But the 7% assessment cap was not designed to address the changes in the housing market after the bubble burst. As a result, much of the value of the homeowner exemption that had accumulated since 2005 has been wiped out by declining home values.
All owner-occupied homes in Palatine Township are still eligible for a minimum homeowner exemption discount worth about $517.74, and some will receive exemptions worth more. But for most people, this year’s tax discounts due to exemptions are smaller than last year’s.Continue reading
(a new page will open leading you to the Palatine Township page: http://www.palatinetownship.com/assessor-services/ )
The following information was copied from the Palatine Township Assessor website, and although may not apply to you living in a different city, it is probable that similar tax changes may impact you as well. Please contact your local assessor's office for more information. Click here to read full article. Four Daughters Real Estate does not provide legal or tax advise. Please consult an attorney or tax professional for further assistance.