You can’t afford to miss the opportunities of savings from Cook County property tax exemptions!
When investing in real estate, it's crucial to minimize the cost of your largest liability: your home. A home remains a liability until it starts generating income or assists you in acquiring additional real estate, which can be a risky strategy. Therefore, focusing on reducing the financial burden of homeownership is essential for a successful investment portfolio.
One effective way to lower your liabilities is by leveraging property tax exemptions. These exemptions can significantly decrease your annual property tax bill, freeing up more of your budget for other investments. Understanding and applying for these exemptions can lead to substantial savings.
Additionally, keeping abreast of local tax laws and any changes to property tax regulations is vital. Many homeowners miss out on potential savings simply because they are unaware of the exemptions available to them. By staying informed and proactive, you can maximize your real estate investment returns and reduce the overall financial burden of your home.
In Cook County, residential properties are taxed at 10% of their Equalized Assessed Value (EAV) and commercial properties at 25%. The EAV is based on fair market value and the State Equalization Factor, from which you can deduct applicable tax exemptions.
Now let’s get down to business. What are the property tax exemptions available in Cook County?
Cook County Tax Exemptions
You can lessen your tax liability and enhance the profitability of your property investments by applying for relevant exemptions and deductions. Cook County offers a range of exemptions tailored to specific circumstances, which can significantly reduce the taxable value of a property and provide substantial savings.
By familiarizing yourself with the available property tax exemptions in Cook County, you can lower your Equalized Assessed Value (EAV) and, consequently, your property tax bill. These exemptions appear as deductions on the second installment property tax bills mailed in the summer, offering a welcome financial respite for homeowners and real estate investors.
1. Homeowner Exemption
The Homeowner Exemption in Cook County applies to primary residences, including single-family homes, townhouses, condominiums, co-ops, or apartment buildings (up to six units). This exemption reduces the Equalized Assessed Value (EAV) of the property by $10,000, resulting in significant savings on the annual property tax bill. Depending on local tax rates and assessment increases, homeowners can save between $250 and $2,000 per year.
To be eligible, the property must be the primary residence of the taxpayer as of January 1 of the tax year in question. First-time applicants must meet this occupancy requirement, while the Cook County Assessor’s Office automatically renews the exemption for properties not sold to new owners in the past year. This exemption is especially beneficial in areas with sharp assessment increases, providing a buffer against higher property taxes.
The savings are reflected on the second installment tax bill, and residents can check their exemptions through their Property Tax Overview.
2. Senior Citizen Exemption
For individuals aged 65 and older, the Senior Citizen Exemption in Cook County provides property tax relief by reducing the equalized assessed value (EAV) of their primary residence by $8,000. This exemption can be applied to single-family homes or condominiums. Eligible seniors can save up to $300 annually, and up to $750 when combined with the Homeowner Exemption. To qualify, the homeowner must be at least 65 years old during the tax year, own the property, and occupy it as their primary residence as of January 1 of the tax year.
The Cook County Assessor's Office now automatically renews the Senior Citizen Exemption for properties that have not been sold to new owners within the past year. Starting from the taxable year 2023, the maximum exemption is $8,000 in Cook and all contiguous counties, while remaining at $5,000 for other counties.
To apply for the Senior Citizen Exemption, the applicant must submit an application form, a closing or settlement statement if applicable, a recent property tax bill, and proof of age and residency. This exemption is available only for the primary residence of the senior who is responsible for paying the real estate taxes and is either the owner of record or holds a legal or equitable interest in the property. The exemption automatically renews each year, simplifying the process for eligible seniors.
3. Senior Freeze Exemption:
For individuals aged 65 and above with a total household income of $65,000 or less, the Senior Freeze Exemption in Cook County freezes the equalized assessed value (EAV) of their property at a base year value. This cap on the EAV prevents property taxes from increasing due to rising property values, providing significant savings for eligible seniors.
To qualify for this exemption, applicants must be 65 years old as of January 1 of the applicable tax year, have a total household income of $65,000 or less, and submit Form PTAX-340 to the Chief County Assessment Office annually. The exemption requires the property to be the applicant's principal residence, and the applicant must have owned or had a legal interest in the property for the relevant tax years.
The Senior Freeze Exemption is particularly beneficial for those in neighborhoods with appreciating property values, as it locks in the property's EAV at the value it was when the homeowner first qualified. This exemption is income-sensitive, meaning it must be applied for annually to ensure continued eligibility based on the household income limits for the given year.
Additionally, seniors who qualify for the Senior Freeze Exemption automatically receive both the Homeowner Exemption and the Senior Citizen Exemption, further enhancing their property tax savings. Seniors who do not meet the income requirement for the Senior Freeze Exemption may still be eligible for the Senior Exemption, which has no income restrictions.
4. Homestead Improvement Exemption
The Homestead Improvement Exemption in Cook County temporarily lowers the assessed value of properties after qualifying renovations or additions. Homeowners can make up to $75,000 worth of improvements without an increase in property taxes for at least four years. This exemption is limited to 33 1/3 percent of the fair cash value of the improvements, translating to a maximum of $25,000 in assessed value.
This exemption is available to owners of single-family homes, condominiums, cooperatives, and apartment buildings with up to six units. It applies automatically based on field checks for building permits conducted by the Cook County Assessor's office. After these checks, the Assessor sends a notice to property owners confirming the exemption.
To qualify, homeowners must submit Form PTAX-323 along with a valuation complaint to the Cook County Assessor. This exemption effectively freezes the Equalized Assessed Value (EAV) at pre-improvement levels, providing significant tax relief by cushioning the immediate tax impact of home enhancements.
5. Longtime Occupant Exemption
The Long-Term Occupancy Homestead Exemption (LOHE) in Cook County is available to only 2% of homeowners and offers an expanded Homeowner Exemption with no maximum amount. To qualify, the property must be the primary residence with a total household income of $100,000 or less. Additionally, the homeowner must have occupied the property for 10 continuous years or 5 years if assistance was received through a government or non-profit housing program. Applicants must also meet income and residency requirements and experience a significant assessment increase exceeding state legislature limits.
This exemption sets limits on Equalized Assessed Value (EAV) increases based on household income. For incomes of $75,000 or less, the EAV increase limit is 7% annually, while for incomes between $75,000 and $100,000, the limit is 10% annually. It's important to note that homeowners cannot benefit from both the LOHE and either the General Homestead Exemption or the Low-Income Senior Citizens Assessment Freeze Homestead Exemption.
The Cook County Assessor’s Office automatically mails applications to homeowners who may qualify for the LOHE. The exemption, created by Public Act 95-644, has been in effect in Cook County since the 2007 tax year. It is designed for residential properties occupied continuously by a qualified taxpayer who meets the specified income and residency criteria.
6. Disabled Persons Exemption
The Persons with Disabilities Exemption provides an annual $2,000 reduction in the Equalized Assessed Value (EAV) of a primary residence owned and occupied by a person with a disability. To qualify, the homeowner must be unable to engage in substantial gainful activity due to a medically determinable physical or mental impairment, own the home, and be responsible for paying property taxes. Applicants must submit proof of disability, such as a Class 2 Illinois Disabled Person Identification Card, along with other supporting documents.
New applicants need to complete Form PTAX-343, Application for the Homestead Exemption for Persons with Disabilities, and submit it to the Chief County Assessment Office. This exemption must be renewed annually by filing Form PTAX-343-R, Annual Verification of Eligibility for the Homestead Exemption for Persons with Disabilities. Due to recent changes in the law, individuals who received this exemption for tax year 2021 will be automatically renewed going forward.
It is important to note that this exemption cannot be used in the same year as the Veterans with Disabilities Exemption for Specially-Adapted Housing or the Standard Homestead Exemption for Veterans with Disabilities. However, it can be combined with other property tax exemptions available for homeowners and senior citizens.
7. Returning Veterans' Homestead Exemption
The Returning Veterans' Homestead Exemption honors qualifying veterans by offering a $5,000 reduction in the Equalized Assessed Value (EAV) of their principal residence. This reduction acknowledges their service and is available for two consecutive tax years: the year the veteran returns from active duty in an armed conflict involving the U.S. armed forces, and the following year.
To qualify, veterans must own and occupy their home as their principal residence on January 1 of each assessment year. If a veteran purchases a home after January 1 of the year they return, they can receive the exemption in the following tax year. Veterans can reapply for the exemption in additional years if they return from active duty again.
To receive this exemption, veterans must file Form PTAX-341, the Application for Returning Veterans' Homestead Exemption, with the Chief County Assessment Office. This process ensures that eligible veterans receive the property tax relief they deserve for their service.
8. Disabled Veterans' Standard Homestead Exemption
The Disabled Veterans Standard Homestead Exemption offers an annual reduction in the Equalized Assessed Value (EAV) of the primary residence for qualifying veterans with a disability. To be eligible, the veteran must own or lease a single-family home, be responsible for property taxes, and have a total EAV of less than $250,000 after excluding any commercial use. The amount of the reduction depends on the level of disability, as certified by the U.S. Department of Veterans Affairs: $2,500 for 30-49% disability, $5,000 for 50-69%, and a complete exemption for 70% or more.
Veterans must apply annually for this exemption using Form PTAX-342, and the exemption does not automatically renew. However, those certified as 100% disabled do not need to reapply each year. The exemption cannot be combined with the Veterans with Disabilities Exemption for Specially Adapted Housing or the Homestead Exemption for Persons with Disabilities in the same year.
Surviving spouses who have not remarried can continue to receive the exemption on the veteran's primary residence or transfer it to a new primary residence. For the tax year 2023 and onwards, this exemption is also available to the un-remarried surviving spouses of veterans whose death was service-connected and certified by the U.S. Department of Veterans Affairs.
9. Veterans with Disabilities Exemption for Specially-Adapted Housing
The Specially Adapted Housing Exemption offers a reduction of up to $100,000 on the assessed value of housing exclusively owned and used by a veteran with a disability. This exemption remains valid as long as the veteran, their spouse, or unmarried surviving spouse resides on the property. It includes mobile homes owned and used by the veteran or their spouse.
This exemption applies to housing purchased or constructed with federal funds specifically for veterans with disabilities. Starting from the 2015 tax year, it also covers housing constructed or adapted to suit a qualifying veteran's disability if funded by a charitable organization and approved by the U.S. Department of Veterans Affairs.
However, the property cannot receive this exemption simultaneously with the Homestead Exemption for Persons with Disabilities or the Standard Homestead Exemption for Veterans with Disabilities. This ensures that veterans utilize the most beneficial exemption available to them.
Bonus! These two are not tax exemptions but still tax relief options you can avail as a property owner in Cook County.
Senior Citizen Tax Deferral
The Senior Citizens Real Estate Tax Deferral Program in Illinois allows qualified senior citizens to defer up to $5,000 of their property taxes annually, treating it like a loan from the state. The program's income limit has increased to $65,000, and the deferred amount, along with 3% annual interest, is repaid upon the sale of the home or the taxpayer's death.
To qualify, homeowners must be at least 65 years old by June 1 of the relevant tax year, have lived in the property as their primary residence for at least three years, and have a household income below $65,000. Additionally, the property must be insured, taxes must not be delinquent, and if there is a mortgage, the lender must approve the tax deferral loan. The state files a lien on the property to ensure repayment.
This deferral program differs from property tax exemptions as it operates as a loan rather than a discount or freeze on taxes. Seniors do not need to repay the loan while living in the property unless they refinance. The program allows multiple annual loans, and the loan balance, including interest, must be repaid within one year of the taxpayer's death or 90 days after the property ceases to qualify.
To apply for the program, seniors must complete Form IL-1017, Application for Deferral of Real Estate/Special Assessment Taxes, and Form IL-1018, Real Estate/Special Assessment Tax Deferral and Recovery Agreement.
Property Tax Extension Limitation Law (PTELL)
The Property Tax Extension Limitation Law (PTELL) is designed to limit the increases in property tax extensions for non-home rule taxing districts, allowing for a controlled inflationary increase in tax extensions on existing property and additional amounts for new construction. This law, often misunderstood as "tax caps," does not cap individual property tax bills or assessments but rather restricts the total tax revenue growth for taxing districts.
PTELL provides property owners some protection against rapidly rising tax bills due to increasing property values. It slows revenue growth for taxing districts when property values and assessments outpace inflation. If a taxing district requires more funds than allowed by the PTELL, it can seek voter approval for an increase. The collar counties (DuPage, Kane, Lake, McHenry, and Will) became subject to PTELL in the 1991 levy year, with Cook County following in the 1994 levy year.
Now that you know the many different property tax exemptions in Cook County, let me show you more about Cook County property tax system.
How is property taxed in Illinois?
Every three years, the local County Assessor estimates the fair market value of your property, which reflects the amount someone might pay to purchase it. The assessed value is then determined based on this fair market value: for homeowners, it is 10% of the fair market value, while for most commercial properties, it is 25%.
After establishing the assessed value, the state equalizer is applied to create the Equalized Assessed Value (EAV). Property tax exemptions can further reduce the EAV. Homeowners can file for up to four exemptions. The adjusted EAV is then multiplied by the local tax rate to determine the taxable amount.
Property tax bills are issued by the County Treasurer’s Office in two installments: the first installment is due in March and is exactly 55% of the previous year's total tax amount, while the second installment is due in August and includes updated tax rates, levies, and any applicable exemptions.
The collected property taxes fund local taxing bodies based on their set levies. Your share of these taxes is determined by your property's assessed value relative to the total assessed value of properties in your area. This process ensures that property taxes are allocated according to the value of individual properties within the community.
For example:
Fair Market Value: $284,900
Assessment (Residential) x 10 %
Assessed Valuation 28,940
2023 State Equalization Factor x 3.0163
Equalized Valuation (EAV) 85,934.39
Homeowner's Exemption - 10,000
Homestead Improvement Exemption - 25,000
Senior Citizen Exemption - 8,000
Persons with Disabilities Exemption - 2,000
EAV After Exemptions 40,934.39
Property Tax Rate x 6.19%
Total Taxes Payable = $ 2,533.84
How to Apply For Property Tax Exemptions
The Cook County Assessor's Office has streamlined the application process by moving it online. Homeowners can check the Cook County Portal website to review their Exemption History and Status, determining which exemptions they received last year and if they will auto-renew this year. New homeowners and those needing to reapply can complete the application online.
For those applying by mail, ensure to send copies of required documents rather than originals, as they cannot be returned. This method allows for a paper-based submission while keeping your original documents safe.
Applying in person at the Assessor’s Office allows for an immediate review and return of your documents. This option provides a hands-on approach for those who prefer face-to-face assistance with their application.
If you suspect any missing exemptions, visit the Cook County Assessor’s Office website and perform a property search. If an exemption is missing for a specific tax year, you should apply for a Certificate of Error at the Cook County Assessor’s Office to reclaim past savings.
How these Tax Exemptions can Help You:
More than 10,000 Cook County property owners overpaid their property taxes last year, leading to $22 million in automatic refunds, according to Cook County Treasurer Maria Pappas. Most homeowners will not need to file applications or complete paperwork to receive these refunds, which will be issued either via direct deposit or check by August 9.
The refunds primarily benefit senior citizens and other residents eligible for property tax exemptions, whose tax breaks often exceed the amount billed. Since these homeowners already made their first installment payment in March, they are now entitled to automatic refunds.
To determine if they are eligible for a refund, residents can visit the Cook County Treasurer’s website, select the “Your Property Tax Overview” section, and enter their address or 14-digit Property Index Number (PIN). This will provide details on any automatic refunds due.
Since the launch of the automatic refund program in 2018, approximately $143.2 million has been refunded to over 165,114 property owners without requiring applications, simplifying the process for taxpayers.
Aside from tax refunds, property tax exemptions provide significant financial relief to property owners and investors by reducing the taxable value of their properties, thereby lowering their annual tax bills. This reduction in taxes can enhance the affordability of homeownership for individuals, particularly seniors, veterans, and those with disabilities, by freeing up resources for other expenses or investments. For investors, lower property taxes can improve cash flow, increase the return on investment, and make properties more attractive for purchase or development.
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