How To Qualify For A Tax Exemption
Of course, there are qualifying rules for all these tax breaks, and the first of these is your age. As noted, these exemptions are generally reserved for those who are age 65 or older. Only one spouse must typically be 65 or over if youre married and you own your property jointly.
New York will allow you to continue claiming your exemption if your spouse was over 65 but is now deceased. Texas will do this as well, but only if the surviving spouse is age 55 or older.
Age 65 is by no means a universal rule, however. Its just 61 in Washington State, andNew Hampshire will increase your exemption over the years as you age, sort of like giving you a birthday present each year, although you do have to be at least age 65.
Many locations require that youve owned your home for a prescribed period of time. Its 12 months in New York, but if you qualified at your previous residence, you can carry that period of ownership over to your new home. Cook County, Illinois, has a similar rule.
And you must live in the property. It must typically be your residence. New York offers a slim exception to this rule if you must move into a nursing home, provided that you still own your home and your co-owner or spouse still lives there. But exemptions rarely apply to investment, commercial, or rental properties.
The Senior Assessment Freeze
This benefit is not an exemption. But it has significant potential value to the homeowner. To be entitled to it, you must be 65 on January 1st of the applicable tax year. Also, your total household income from all sources cannot exceed $65,000. .
If you qualify for the assessment freeze, your propertys assessed value can be frozen at the current value. This protects you against increases in assessed value for any year that you qualify for the freeze.
For example, a person who is 75, is income qualified, and who has resided in her house after turning 65, will pay taxes based upon her assessed value from the year she turned 65. This can be a significant savings in neighborhoods where values have appreciated, especially in gentrified areas.
Because this benefit is income-sensitive, you must apply for it annually.
The Property Tax Rebate In Illinois
Those who qualify for the Property Tax Rebate in Illinois will be able to receive up to $650 in tax breaks per year. The amount will be calculated by taking their adjusted gross income in 2021 and 2022, as well as their property taxes in that year. There is no cap on individual property tax bills or individual property assessments, according to the PTELL. It also allows a taxing district to apply for a limited inflationary increase in tax extensions on existing property, plus an additional amount for new construction and voter-approved rate increases. Property taxes in Illinois are one of the highest in the country in part due to the citys eight pension funds, which have amassed nearly $45 billion in debt. Local governments are forced to raise property taxes as a result of this debt.
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What Are Tax Exemptions
Exemptions dont have any effect on tax rates, and they dont typically subtract from your tax bill. As the name suggests, a tax exemption makes certain income, assets, or a portion of those income and assets free from taxation.
In the case of income taxes, exempt income is not included in your taxable income. In the case of property taxes, your state might freeze the value of your home, on which property taxes are based, and the balance of its value over this amount isn’t subject to taxation as property values rise. Value over this amount is “exempt.” Some states reduce the value of your home that’s subject to taxation by a percentage or dollar amount.
Property taxes are imposed at state, county, and local levels. This is one area of taxation that the Internal Revenue Service doesnt have a hand in, but that can be both a good and a bad thing. Blanket, coast-to-coast rules exist for federal taxes, but property tax rules can vary considerably from state to state. They can even differ from one city to the next within the same county.
Some similar regulations and provisions apply in most jurisdictions and many states do have some statewide rules.
Senior Citizen Tax Deferral
There is also a loan program to help homeowners who are 65 by June 1 of the relevant tax year. Your household income from all sources must be below $55,000. If so, you may qualify for a state loan of up $5,000 to pay current property tax bills.
The program requirements include:
- The property must have been your primary residence for at least 3 years
- You must have property insurance
- Taxes cannot be delinquent
- If there is a mortgage on the property, the lender must approve the tax loan
- Multiple annual loans are permitted. There is a maximum 80% loan-to-equity ratio, taking all loans into account
- You dont have to pay back the loan while you live in the property unless you refinance your loans, and
- The loan balance, including 6% annual interest, is payable upon sale of the property, refinance or death of the property owner.
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How Can I Apply For An Illinois Property Tax Exemption
Although Illinois state law creates property tax exemptions, you apply for exemptions through your county assessors office. So, visiting your county assessors website is a good first step in learning how to apply for an exemption.
You may be able to apply for exemptions online in some counties through the county assessors website. In others, you may have to mail an exemption application form. Generally, you can either download application forms from the county assessors website or call the assessors office to ask them to mail you a form.
Some exemptions require you to apply every year, while others renew automatically. And youll generally need to apply by a specific deadline for each tax year, which can vary from county to county.
What Illinois Property Tax Exemptions Are Available And What Are They Worth
Its important to understand that the amount of an exemption reduces the equalized assessed value, or EAV, of a property. Its not a dollar-for-dollar reduction in the amount of property tax you may owe. So, if a home that has an EAV of $200,000 and a tax bill of $3,000 is eligible for a $1,000 property tax exemption, that exemption will lower the EAV to $199,000. It wont necessarily lower the tax bill by $1,000.
What is equalized assessed value?
In Illinois, equalized assessed value, or EAV, is the partial value of a property that a taxing body uses to calculate the propertys tax bills.
How much an exemption is worth will depend on multiple factors, including which exemption if any you qualify for, the assessed value of your home and the tax rates its subject to. And each exemption has specific rules for who can get the exemption and how it works.
Here are basic descriptions of some of the exemptions available in Illinois and what they could be worth.
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Details Of The Illinois Property Tax Freeze For Seniors
According to the Illinois Compiled Statutes, Section 200/15-172, an Illinois citizen is entitled to a senior assessment freeze if:
As long as the applicant is qualified for this exemption, the government will keep the equalized assessed value of their home frozen during the current year. This doesnt mean that this tax relief method freezes tax ratesthey can still increase, depending on the local parameters.
The exemption doesnt renew automatically. If you apply for it and claim it, you need to submit a Form PTAX-340 each year to keep using the tax benefits.
Illinois Property Tax Appeal Board Website
The Illinois Property Tax Appeal Board website is a great resource for property owners who are appealing their property taxes. The site provides information on how to file an appeal, what to expect during the appeals process, and how to contact the Board. The site also provides links to resources that can help property owners prepare for their appeals.
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Senior Citizen Tax Deferral Program
This program allows qualified senior citizens to defer all or part of the property taxes on their personal residence. It’s a form of a loan with a 6% interest rate, which is to be repaid after the taxpayer’s death or at the time the property is sold. Each year, the County Assessment Office mails information to all taxpayers receiving a senior homestead exemption informing them of the program and its deadlines.
To qualify you must:
- Be 65 or older by June 1 of the tax year.
- Have a maximum household income of $55,000.
- Have lived in the property or other qualifying property for at least 3 years, except for periods in which you may have resided temporarily in a nursing or sheltered care home.
- Own the property which must be used exclusively for residential purposes. This includes a condominium or a dwelling unit in a multi-dwelling building that is owned and operated as a cooperative. Please note that joint ownership under this program is limited to you and your spouse.
- Not owe any delinquent property taxes on the property.
Note: The filing deadline for the program is March 1 of the tax year.
Senior Citizen’s Assessment Freeze
- To qualify you must also receive the Senior Homestead Exemption and have had the property you are applying for be your principal residence for a period of time that would include the past two January 1st .
- First-time applicants can obtain forms from the County Assessors Office.
- This exemption freezes the assessment on your property if your total household income is 65,000.00 or less.
- This exemption does not freeze your tax rate it freezes the assessed valuation that appears on your tax bill.
- This exemption must be renewed annually. The County Assessor mails applications to all taxpayers receiving the Senior Homestead Exemption.
- If you are applying for this exemption and the property is held in trust, the law requires that we verify the applicant is a beneficiary of that trust. The exemption cannot be applied without this verification. Please include a copy of that part of the actual trust agreement which states that the applicant is the beneficiary. This can usually be found on the first few pages of the trust document. Should you have any questions, please feel free to contact us directly at 618-998-2189 ext. 1184.
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Pritzker Signs Measure Expanding Property Tax Exemption For Seniors Veterans And Those With Disabilities
Gov. J.B. Pritzker speaks to reporters in the state Capitol in Springfield, Ill., on Tuesday, April 5, 2022.
Seniors, veterans and persons with disabilities in Illinois could get property tax relief under legislation the governor signed Friday.
The state has among the highest property taxes in the nation, regularly ranked second or first in the nation, depending on the report.
Senate Bill 1975, signed by Gov. J.B. Pritzker on Friday, increases the general homestead exemption and senior citizens homestead exemption, reduces interest rates on tax deferrals for seniors and allows for automatic renewal of the homestead exemption for qualifying people with disabilities in Cook County, according to the governors office.
The measure incentivizes taxing districts to opt for the lowest necessary property tax rate, the governors office said, saving property taxpayers hundreds of dollars in savings in property tax on an annual basis.
For tax levy year 2023, the law sets maximum homestead exemptions of $8,000 for counties bordering Cook County. All other counties will have a maximum exemption of $6,000. Cook Countys maximum exception will remain $10,000.
For the senior homestead exemption, the collar counties maximum is increased from $5,000 to $8,000, but $5,000 for all other counties. Seniors getting food or utility subsidies will automatically qualify for the senior freeze. The Senior Citizen Real Estate Tax Deferral program interest rate is decreased to 3% from 6%.
How Does One Apply For This Tax Deferral Program
Application for the Senior Citizens Real Estate Deferral Program must be made each year. The applications include:
- A request for information about the taxpayer, his or her income and the property for which the deferral is being sought.
- A request that any joint owners must agree to the deferral. Presentation of evidence of adequate insurance on the property.
- Completion of an agreement which sets out the conditions of the tax deferral, including the maximum amount which can be deferred, the interest rate to be charged, and the arrangements for repaying the “loan”.
A brochure containing more detailed information can be obtained at the Collector’s Office.
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How Long Does A Cook County Property Tax Appeal Take
After the second installment tax bill is due, an appeal to court must be filed within 5-1/2 months. It usually takes one to three years for PTAB appeals to be resolved. The majority of cases, however, are resolved once they have been resolved they usually take between 12 and 18 months to resolve. Some cases go to trial and take longer to resolve.
In Cook County, You Can Reduce Your Property Tax Bill By Using The Homeowner Exemption.
When your property is reassessed, the EAV is updated to reflect changes in the market, such as inflation. Your tax bill will be calculated using this information. The Homeowner Exemption can be used to reduce your bill by as much as you are entitled to. When your homes assessed value does not increase, you will be exempt from paying taxes on it. Find out if you have an exemption by visiting the Cook County Assessors website or calling 744-3200. You can also use the Assessors database to find out how much your home is worth.
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Senior Citizen Homestead Exemptions
The Senior Citizen Homestead Exemption is available to property owners over age 65 for the applicable tax year. Property taxes are paid one year after they are assessed. That means for the bills which are payable in 2019, the homeowner would have had to reach age 65 by December 31st, 2018 or before.
This Exemption is worth an $8,000 reduction on your homes EAV. This is in addition to the $10,000 Homestead Exemption. So, a senior citizen can receive an $18,000 reduction on their EAV.
Again, this is only applicable to your primary residence. Unlike the Homeowners Exemption, however, this Exemption requires an annual application. You must seek out the Exemption form for the first year in which you are entitled to claim this exemption. After that, the Assessors Office will probably mail the application to you. The form should be returned to the Assessor as soon as possible.
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Senior Citizens Homestead Exemption:
Homeowners must be 65 years of age or older within the assessmentyear in which they are applying. They must own and reside in the homeas of January 1st of the assessment year in which they are applying andbe liable for the payment of the property taxes. First time applicantsmust provide legal documentation of how they obtained ownership to theproperty . Renewals are required annually and must becompleted between January 1st and May 1st of each assessment year. Theamount of this exemption is $5,000.
Returning Veterans Homestead Exemption
This exemption provides a one-time $5,000 reduction in a propertyâs equalized assessed value to qualifying veterans who return from active duty in an armed conflict involving the armed forces of the United States. To receive this exemption, the veteran must file an application upon their return home.
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Senior Citizen Assessment Freeze Exemption
This exemption is available to senior citizens if a residential property is owned and occupied by a person at least 65 years of age with a household income of $65,000 or less. This exemption is based on occupancy of January 1 of the application year and January 1 of the year prior to application and is administrated by the Chief County Assessment Office.
The amount of the exemption is equal to the current years assessed value over the assessed value prior to the first qualifying year. Annual applications are required. View step-by-step instructions and other general information .
Best States Overall For Property Taxes In 2020
A hefty exemption might be nice, but you could receive about the same relief as someone living in an area with low property taxes, low assessed values, and just a modest exemption if property tax rates and home values are exceptionally high where you live. Tax-Rates.org provides a comprehensive list of states’ median property tax rates. The 11 states with the least expensive property tax rates as of 2020 are:
These are state-wide median rates, not actual tax rates in any jurisdiction. Half of all property taxes are higher that the rates cited, and half are less.
But it can be relative. Some states have low property tax rates, but they impose a very high income tax rate or they might have prohibitive sales taxes. The average home value in others is comparatively low, which might make them better retirement choices overall.
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How Is Property Taxed In Illinois
Every three years, your local County Assessor estimates the market value of your property. This may reflect the amount someone might pay to buy it from you. As an example, lets assume this amount is $200,000.
The next step is to find your Equalized Adjusted Value or EAV. This is done using a formula established every year. In Cook County, it is usually around 30% of market value. So, your EAV would be $60,000.
Finally, you multiply the EAV by your local tax rate. This varies by municipality. Some rates are around $7.00 per hundred dollars of value. Others are well over $20.00 per hundred in other locations. Lets say it was $10 per hundred dollars of value. Since the amount is per hundred, you first have to divide the EAV by 100. In our example that would give us $600. Then you would multiply by the tax rate of $10 to get $6,000. That would be your property tax for the year.
Now that we understand how property is taxed, we can talk about exemptions and other benefits.