Tax, SDIRAs & Cost Segregation

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Property Taxes Increased by more than double

Jordan Gerkin
  • Investor
  • Mattoon, IL
Posted Nov 28 2022, 13:53

Hi Everyone, 

I’m sure there are others dealing with the same thing, at least in Illinois anyways, but is it normal for your property taxes to increase by more than double in one year?? I understand they will increase every so often, but I bought this property March of 2020 and now for 2023, my taxes are going to be more than double due to the area having a re assessment on rental properties. 

Any info would be greatly appreciated!


Thanks!


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Chris McCormack
  • Accountant
  • Edina, MN
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Chris McCormack
  • Accountant
  • Edina, MN
Replied Nov 28 2022, 14:19

Property taxes are calculated based on fair market value. Counties / governments are usually quick to provide the assessments when properties have gone up but not so quick when properties have gone down. While you may be out of luck for this year, if property values go down, as some expect to occur, don't hesitate to reach out for a reassessment.

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Tom Morrissey
  • Investor
  • Odessa, FL
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Tom Morrissey
  • Investor
  • Odessa, FL
Replied Nov 28 2022, 14:19

Do you know what drove the increase?  The property tax rate?  the formula they use? or the property value?

I'm unsure how Illinois manages their Assessed value.  In Tennessee it is reevaluated every four years, so it wouldn't be surprising to see a large increase of taxes after the past couple years of value increases.

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Jordan Gerkin
  • Investor
  • Mattoon, IL
Replied Nov 28 2022, 20:01

@Chris McCormack okay yeah seems to make sense. I will be reaching out to them about a reassessment if I can make that work. Thanks! 

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Jordan Gerkin
  • Investor
  • Mattoon, IL
Replied Nov 28 2022, 20:04

@Tom Morrissey I believe it was a reevaluation of the property value. From what I understand they have reevaluated the rental properties in the area. I just wasn’t expecting it to increase by 117% in one reassessment. 

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Replied Nov 28 2022, 20:44

You can appeal it.  I've had my property values more than double over the last 5+years, but I've not had the taxes double.  They have gone up, but not that much.  What has the city done that requires more than twice the budget it had last year because that is where most of your taxes are going.

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Jordan Gerkin
  • Investor
  • Mattoon, IL
Replied Nov 28 2022, 21:04

@Theresa Harris ahhh okay makes sense. I hope that would be the case here for me because that would be a big increase in my expenses. I have requested to start an appeal and get the paper work for that, so I’ll see what happens. They acted like my taxes would be doubling, but someone else that I have talked with said they were not able to tell them what there new tax amount was going to be. All they could see was the new assessment amount. 

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Kenneth Garrett
  • Investor
  • Florida Panhandle/Illinois
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Kenneth Garrett
  • Investor
  • Florida Panhandle/Illinois
Replied Nov 29 2022, 02:49

@Jordan Gerkin

In Illinois, typically 75% of your property taxes go the public school district, the rest is split between townships, libraries, fire departments and the city/village, etc.  The city/village is generally a few hundred dollars only.  If your taxes were way under valued then this could cause that.  I have a property I bought 7 years ago and they are 60% more than when I bought it. It’s either your accessed value which never seems to go down or the multiplier.  Back during the Great Recession assessment values went down so they raised the multiplier on all us.  The government still got there’s.  You can always appeal.  There are plenty legal and tax companies who will do it for you at a cost 1/3 the tax savings.  I’ve used them before.  You can also file yourself.  Just be aware there is a small window in which to appeal which last about six weeks or so.

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Chris Seveney
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Chris Seveney
  • Investor
  • Northern Virginia
Replied Nov 29 2022, 03:56

@Kenneth Garrett

Increases in property taxes and home owners insurance are going to go through the roof in the coming years due to higher wages of state employees and lower revenues coming in the door.

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Brie Schmidt
  • Real Estate Broker
  • Chicago, IL
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Brie Schmidt
  • Real Estate Broker
  • Chicago, IL
ModeratorReplied Nov 29 2022, 07:47
Quote from @Jordan Gerkin:

Hi Everyone, 

I’m sure there are others dealing with the same thing, at least in Illinois anyways, but is it normal for your property taxes to increase by more than double in one year?? I understand they will increase every so often, but I bought this property March of 2020 and now for 2023, my taxes are going to be more than double due to the area having a re assessment on rental properties. 

Any info would be greatly appreciated!


Thanks!



 I am an agent in Chicago, I never run number on current taxes because they usually see a big increase when the tri-annual assessment happens.  The formula I use here is 80% of the purchase price for the reassessed value x the current tax rate (2% - 2.5% depending on the area)

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Nicole Heasley
  • Lender
  • Youngstown, OH
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Nicole Heasley
  • Lender
  • Youngstown, OH
Replied Nov 29 2022, 08:02

When I lived in Cleveland, I hired a law firm to handle my appeal. They took a cut of the total reduction that first year, and I only had to pay if they were successful. It was worth the money to not have to lift a finger in handling the process. You may want to look into something similar.

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Jonathan Klemm
  • Contractor
  • Chicago, IL
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Jonathan Klemm
  • Contractor
  • Chicago, IL
Replied Nov 29 2022, 11:36

Hey @jordan - In Illinois and specifically Chicago / cook county you never know what is going to happen with property taxes.  We just try to underwrite as conservatively as possible and be aware of when our next reassessment is.  We also ALWAYS appeal our taxes.

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Jay Thomas
  • Real Estate Agent
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Jay Thomas
  • Real Estate Agent
Replied Nov 29 2022, 12:12

If your property has gone down in value, you should contact your local county or municipality to see if you qualify for a reassessment. This can be done by filing an appeal with the local tax assessor's office. Reassessments are typically performed when there is a significant change in the market value of a property and they usually take into account changes in the local economic conditions, such as job losses or a decline in housing prices. Even if you don't qualify for a reassessment this year, it's important to stay informed about current market values and contact your local assessor should property values go down in the near future. By doing so, you may be able to lower your tax bill for next year.

Keep in mind, however, that even if values go down, some governments are slow to adjust assessments and you may need to be persistent in order to receive a reassessment. Also, it's important to understand that any changes made will only affect the current tax year and not those of prior years. It pays to stay informed and be proactive when it comes to your property taxes. If you suspect that your taxes are too high, don't hesitate to reach out for a reassessment. Doing so may help you save money in the long run!

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Bob Floss II
  • Attorney
  • Northbrook, IL
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Bob Floss II
  • Attorney
  • Northbrook, IL
Replied Dec 6 2022, 09:56

@Jordan Gerkin Part of my attorney review is to review the assessed value and tax bill if we need to change the prorations. I'll give the buyer a heads up if the property is under-assessed or the tax bill is due for an increase. Like @Brie Schmidt said, this needs to be part of your underwriting for the property. 

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Jordan Gerkin
  • Investor
  • Mattoon, IL
Replied Dec 7 2022, 14:01

Thank you guys for the responses! I really appreciate it! I am in the middle of talking with the assessment office looking into possibly appealing them. We’ll see what happens. 

Thanks again!

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Eliott Elias#3 All Forums Contributor
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Eliott Elias#3 All Forums Contributor
  • Investor
  • Austin, TX
Replied Dec 7 2022, 22:10

1. You can protest 

2. You charge more in rent 

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George Skidis
  • Rental Property Investor
  • Belleville, IL
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George Skidis
  • Rental Property Investor
  • Belleville, IL
Replied Dec 10 2022, 17:24

Possible reasons in Illinois. 1. The prior owner appealed the real estate taxes and won. 2. Their appeal was based upon a demised property and based on the pre repair value. 3. The prior owner had connections you do not. 4. The prior owner received one or more of these discounts: Owner Occupied, Disabled Veteran with less than a 70% disability, 65 and older Senior Freeze. 5. Non-Vet Disabled Homeowner Discount.  In Saint Clair County, Illinois Real Estate taxes are re-assessed every four years. 6. How much did the property go up in value due to inflation and sellers' market circumstances. 7. Is the new RE tax based upon your purchase price. 8 the local county increased the rate. 9. It went from owner occupied to rental and caused the loss of the owner-occupied exemption. In Cahokia a homeowner would pay $1,100 for the house but if converted to a rental it could go up to around $2,000 You should always appeal.

Financial Advisor Illinois (#NPN 951878)

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Jordan Gerkin
  • Investor
  • Mattoon, IL
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Jordan Gerkin
  • Investor
  • Mattoon, IL
Replied Jan 24 2023, 22:45

Thanks again everyone for your inputs! Really appreciate it! I was able to get the taxes back down to what they were due to the fact that I purchased in 2020. They were doing their reassessment on properties based on the past 3 years of sales, so I still fell in that window and I guess at first it got over looked. Glad I questioned it. Will need to prepare for the future of course.