Property Tax Newsletter
Chicago Property Tax Lawyer
2007 Property Tax Newsletter
January - June 2007
Volume 1 Issue 1
by George N. Reveliotis
Welcome to the first issue of my law office's newsletter. I shall write articles that can help facilitate your understanding of the property tax system and to help invigorate discussion and debate with one another and myself, as I am always willing to entertain questions and to investigate those issues which have multi-dimensional truths. The property tax system (especially in Cook County) is a very complex area of the law. It is designed to serve 1.8 million Property Index Numbers, of which approximately 1.2 million are residential and 600,000 are commercial and industrial. In addition, every year the Cook County Treasurer collects over 9 billion dollars to be disbursed to the municipal and county government agencies.
As a legal practitioner specializing in the area of property tax, I have come to realize that 90% of my understanding of the law comes from practical knowledge from property owners. I have benefited much from being exposed to positive individuals as yourselves, and I look forward to learning a lot more. Therefore, I expect this newsletter to be the start to an expansive interaction between you, the property owner, and myself. To schedule a meeting with me, contact my office today.
Understanding the Property Tax Assessment
by George N. Reveliotis
"The property tax equation is the basis and formula used to ascertain the taxes you will pay."
In Cook County, the tax equation is as follows:
Assessed Value x Equalization Factor x Tax Rate = Property Tax
The assessed value is the value upon which a property is taxed. However, in Cook County, pursuant to a county ordinance, the Assessor classifies real estate for assessment purposes. In determining which classification is applicable, the Assessor looks to the actual use of the property.
In Cook County, the Assessor classifies properties into five general assessment levels. (There are more which will be covered by subsequent newsletters, but for purposes of this article, I will discuss the five main classification levels. The classifications are:
- Commercial (5-17, 5-92, etc.) @ 38%
- Industrial (5-93) @ 36%
- Multi-Unit 7 or more Units (3-15) @ 24%
- Vacant Land (1-00) @ 22%
- Farmland (receives honorable mention) @ 16% but not subject to the equalization factor
The way the classification model functions is to realize also that behind the assessed value hides a fair market value. In essence, what the County Assessor does when he proposes an assessed value for a property is he is indicating his opinion of fair market value. To figure the fair market value is to divide the assessed value by the assessment level percentage assigned to that property. For example, if a commercially classified property has an assessed valuation of $67,893, the fair market value is $178,666 ($67,893 divided by 38%). The same is done with other types of properties except the assessed value would be divided by its own assessment level percentage (i.e. industrial @ 35%; multi-unit @ 24%; vacant land @ 22%; and residential @ 16%).
One can surmise from the above examples that different tax burdens fall on different types of properties. For example, if there are five properties each as enumerated in the above classification model and each worth $100,000 fair market value, the commercial property will be assessed at $38,000, the industrial at $36,000, the multi-unit at $24,000, the vacant land at $22,000, and the residential at $16,000.
The reason behind the different classifications may lie in politics. Because Cook County is so well populated by a numerous and diverse property base, the politicians, when devising these classifications, might have wanted to provide their constituents the extra benefit of a lower classification for their residential properties.
The equalization factor is the tool used by the State to adjust average assessment levels in various counties to the same percentage of full value. Statutory law dictates that the assessment valuations should mirror the percentages outlines listed above. However, if the State determines that a county is under assessing properties by an average of 50%, then the State Department of Revenue has the right to impose an equalization factor of 2. For example, if the County's policy in assessing residential homes is 10%, even though the statutory assessment is 16%, the State will be required to impose an equalization factor of at least 1.667% (that is, 16% divided by 10% = 1.667). For 2005 taxes, the State Department of Revenue assigned an equalization factor of 2.732.
The tax rate is the rate formulated by the County Clerk's Office after the local taxing agencies have levied their budgetary amounts. The Equalized Assessed Valuations (Assessed Values of the properties multiplied by the Equalization Rate) multiplied by the tax rate equals the budgetary amounts. Thus, the tax rate is calculated by dividing the levied budgetary amounts in any given area by the equalized assessed value in the subject area.
Tax rates may differ in different areas because their property tax bases differ quantitatively and qualitatively. For example, when the City of Chicago is compared with a much smaller suburb (which may be experiencing economic hardship), the tax rate in Chicago may be much smaller. This happens because Chicago has an increased quantity property tax base (number of properties) and a much richer and diverse property classification list.
Contact our office to learn more about these specific issues.
The Property Tax Appeal Process in Cook County
by George N. Reveliotis
Every three years, a different geographical section of Cook County gets reassessed. Properties in the southern section of Cook County were reassessed in 2005. In 2006, the whole city of Chicago was reassessed. Finally, in 2007, the northern suburbs of Cook County will be reassessed. Then, the process begins all over again.
The property owner should receive a notice of reassessment in the mail when the County Assess or reassesses a property. This letter will include the Property Index Number, the address, the classification of the property, the pertinent factual information such as the square footages of the land and building, and the previous year's assessed value and the current year's proposed assessed value. In that letter the Assessor will notify the owner of his rights to an appeal. While the law allows the owner to file an appeal with the Assessor's Office, the formal process does not begin until the Board of Review (in Cook County). In other counties, it is very important to file an appeal with the local township Assessor.
Assuming an appeal was filed with the County Assessor, and the decision is not satisfactory, an appeal can be presented to the County Board of Review. The Board of Review is independent from the Assessor's Office and has the role of reviewing the County Assessor's assessments. The Board of Review can hear an appeal after it has been presented to the Assessor or a case of first impression. Finally, it is important to note that the taxes one pays are not based on the Assessor's proposed assessed values, but the Board of Review's certified assessed values.
If the property owner is not happy with the Board of Review's decision, one can file an appeal with the Property Tax Appeal Board or the Circuit Court. Any further reductions in assessed value at these two levels will result in refund checks because subsequent reductions will have deemed the owner of the property to have overpaid her or her taxes.
Finally, if an owner has not filed within the deadlines of the Board of Review, the Cook County Assessor's Office allows that property owner to file a certificate of error request. There are some technical limitations associated with this process which are too extensive for this article, but will be explained in depth in an upcoming issue later this year.
For additional information, contact our office today.
Seniors Receiving the Senior Freeze Exemption
by George N. Reveliotis
By the time you have read this news letter, property owners who have reached the age of 65 or over should have received the Exemption Booklet. If you have not received it, please call my office at (312) 230-0160 or contact us through our website as soon as possible. In order for the senior citizen freeze exemption to be applied on your second installment tax bill, the application must be submitted to the Assessor's Office by June at the latest. The senior freeze exemption is an important exemption because it freezes the property assessment to the level when the owner was 65 years of age. Please keep in mind that even though you might not have applied for the Senior Freeze Exemption for the last years, the law allows property owners to file a certificate of error from the 2003 tax year through the 2006 tax year.
Contact us to learn more about your potential for this exemption.
by George N. Reveliotis
In the next issues, I will discuss the various exemptions available and the possibility of filing for any previously not-applied for exemptions through the certificate of error process. I also will discuss the various incentives the Cook County Accessor's office provides commercial and/or industrial property owners considering improving, rehabilitating, or simply building a new structure in Cook County. Contact our office today to learn more about your options.
Law Office of George N. Reveliotis
30 N. Michigan Avenue
Suite 1619
Chicago, IL 60602
Phone: (312) 230-0160
Fax: (312) 230-0161
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The Law Office of George N. Reveliotis provides comprehensive property tax representation to individuals and businesses located throughout Chicago, Illinois, Cook County, and all of the surrounding areas.
