Property tax is essential in the Chicago area. Without it, we wouldn’t be able to fund the majority of public services we’ve come to depend on. Unfortunately, however, people across the nation to find themselves with an unnecessarily high property tax bill on their real-estate investments each year. Property taxes can be a real burden, but with the help of a good real estate attorney you can avoid paying more than your fair share.
Why Do We Pay Property Taxes?
Before we get into disputing property assessments and overdue property taxes, we should begin by laying the framework by explaining what property taxes entail. Property tax is an annual ad valorem tax that is imposed on the estimated market value of a property. Real property, such as homes, lands, factories, condos, office parks, and other real estate holdings, form the basis for this tax. It is primarily levied by local governments to fund public services such as public school districts, sanitation, police departments, and the water district.
The majority of states – Illinois included – allow local governments to impose taxes on real property that residents must pay in addition to state taxes. This double-taxation can be challenging to manage, but fortunately moststates have a safe guard in place to keep property tax rates from becoming too outrageous. In addition, states typically set assessment limits that prevent a property’s assessed value from increasing over a set percentage between said assessments. In most of Illinois, the assessed value of a property for tax purposes is 33%.
Residents in the Chicago area tend to pay more for property taxes than most of the rest of the country. If you can’t pay your property tax bill, you should get legal help right away. But before that happens, learn more about what to expect if you can’t afford your property tax payments.
What If You Can’t Afford Your Property Taxes?
Property taxes are a major reoccurring annual expense for homeowners and real-estate investors. Property taxes typically amount to 1% to 3% of a home’s assessed value, and there is little flexibility in payment terms. As a result, people sometimes get behind on their property taxes.
There are many reasons why people fall short on their property taxes: loss of income, divorce, death in the family, or an inability to deal with rising costs on a fixed income. Because property tax is linked to your home’s assessed value, it is an expense that continues even after you’ve paid off your mortgage. In fact, you are responsible for paying property taxes in full for each year you own your property. As a result, property taxes can be a particular burden on the elderly.
Regardless of the reason for failing to pay your property taxes, Illinois state law does not look kindly on taxpayers who get behind on their payments. First of all, you cannot sell your real-estate investment if there are any delinquent taxes on the property. Those unpaid taxes will have to be settled before any real-estate transaction can be complete. Second, if your property taxes remain delinquent for an extended period of time, the county collector may initiate foreclosure proceedings. To make matters worse, even if your property is foreclosed upon and sold at public sale, property taxes are still due for the property at the end of the year.
Getting behind in your property taxes can quickly become a very serious matter. Tax assessors can file suits to collect property taxes decades after a delinquency, and there’s no escaping the long arm of the law when its reaching out to collect its money.
When Tax Authorities Come Knocking
The moment a tax collector comes knocking, it’s time to contact your local real estate attorney. Real-estate attorneys have an acute understanding of how to negotiate with tax authorities to come to a manageable resolution. And in certain cases, a real estate attorney can help you determine if you qualify for deferrals or exemptions based on your circumstance. For example, some area have poverty exemptions and circuit breaker programs to provide relief to the elderly and impoverished homeowners who cannot afford their property taxes. You real-estate attorney can also help you apply for property tax deferrals, which allow homeowners to defer payments until either the sale of a property or the death of the taxpayer.
If programs, deferrals, and exemptions do not apply to you, there are still other options you and your real-estate attorney can explore to lessen your property tax bill.
How Your Real Estate Attorney Can Lower Your Tax Bill
Often people are under the impression that their property tax bill is non-negotiable, but that isn’t always the case. As every good attorney knows, everything is negotiable under the right circumstances. Enlisting the help of real-estate attorney can help you identify the circumstances under which you can reduce your property tax liability.
One way to lessen your tax liability is by challenging your property assessment. Your property assessment is what determines your property tax liability, as the amount you pay in property taxes per year is based on an estimation of the market value of your property. This estimation is generally made by a local tax assessor, and in some cases it can be negotiated downward.
Property assessment is not an exact science, and errors occur more often than they should. This is particularly true as most districts use a type of mass or all-encompassing appraisal for residential assessments. In addition, thousands of properties may be assessed simultaneously, and local assessment offices are often understaffed and overworked. For these reasons, property assessments aren’t always accurate and as such can be disputed.
This is particularly troubling, as it often leads to circumstances in which people are unable to pay high property taxes.
Whether a result of an unfairly-assessed tax liability or other personal factors, homeowners and property investors that fall short on their property tax payments will begin to accrue a mounting tax bill. Unfortunately, once that tax snow ball gets rolling, it can be hard to stop, as revenue agencies will continue to tack on late penalties and interest fees until your annual property tax bill is settled. However, if you find yourself struggling with your property taxes keep in mind that you do have options.
The skilled real estate attorneys at M&A Law Firm can help you identify options that apply to your particular case, negotiate with tax authorities, make appeals for overdue property tax bills, and deal with any ongoing enforcement proceedings. As always, proactive planning is the best way to go when dealing with the public treasuries. So if your struggling with your tax liability – don’t wait until the tax authorities come knocking to call your real-estate attorney.