Any success in getting the Tax bill down PRIOR to closing?

Question

I am interested in purchasing a MFR that has a substantial amount of personal property associated with it. I am in IL and the owner pays for the TAX at the time of closing and I feel that the Taxes are high in comparison to the amount that I am willing and they have accepted as a offer contingent on several other factors at this point. What I am asking on this forum is if there is anyone out there that would argue the property taxes for the seller prior to purchasing the property. The current Taxes are at 18032.17 based on an assessment of 509,148. we have agreed on a sales price of 455,000 and I believe that there is approximately 48,000 in personal property when all the stoves, dishwashers, refrigerators, air conditioners, lighting, carpeting is included. This would bring the value down to 407,000. The Taxes based on an assessment of 409k would be only 14,414. If a compliant to the Tax board was successful this would drop the taxes by 3617.72 per year. (or a little over 300 per month!) Two questions. 1. CAN I file a compliant the taxes prior to closing? 2. SHOULD I file a compliant prior to closing? Thanks for any input on this matter! I sincerely appreciate it!

Derek Martin · Answer

@Dean Hulsing You likely do not have legal standing to challenge the taxes until you are the owner. Additionally, you're very unlikely to receive a ruling before closing. As others have mentioned, the seller will pay the taxes until the date you close.

If the numbers make sense with the current taxes, a successful tax challenge down the road is just icing on the cake. Good luck.

Vishal Gadhia · Answer

Agree with @Derek Martin

Always get the seller paid tax credit at closing and then work with a Property Tax attorney to challenge the taxes. You can do it buy your self, but with an attorney most of these are on contingent basis.

They only get paid if they get your taxes lower, which means you can use them to the fullest and there is not pre payment of any sort.

Also they will challenge last two year which will get you a fat refund check if they win you the case. So its again not going to go out of your pocket. Some one paid for it, you are just trying to get a refund.

All the best with your closing.

Dean Hulsing · Answer

@Vishal Gadhia I will check into using a property Tax attorney. Are you saying that I would get the refund even if I did not own the property yet (if they file it for the two years)? That would be about 4000 bucks!

Dean Hulsing · Answer

@Fred Heller The deadline for protesting the taxes is within the next two weeks. The deadline would fall just prior to the date of closing so I would prorate the amount to the date of closing and save the $3600 on the first year as opposed to having to wait a full year for that to happen. I believe that the personal property I mentioned in my first part is all personal property that CAN be removed from the units without damaging the units. The exception to this would be the carpeting and the lighting fixtures.

@Kyle Hipp The reason that I would want to lower them now is because of the deadline that I have to be with in regards to the property Tax of this county in IL. I think that it would benefit the seller if they protest them but I do not think they are managing the property up to the standards that I think are necessary for maximum return.

Fred Heller · Answer

Not giving legal advice. I'm not sure how they do things in Illinois, but I'm guessing that any deadline to protest the 2015 property taxes has already passed.

I'm also not understanding how you're coming up with $48,000 in personal property when the examples you cite are carpet, dishwasher, lighting fixtures, AC units, etc. Those items are generally considered fixtures and part of the real property.

The only time I've ever seen personal property separated from real property on tax statements is when the owner operates a business out of the home. Let's say a guy operates a welding business out of his home and he has $10,000 in welding equipment in the garage. The welding equipment is not attached to the home, and its removal will not damage the home. Thus it is considered personal property.

Kyle Hipp · Answer

The seller is going to pay taxes to you at closing up to the date of closing so why would you want to lower them now? If you close on December 1st they will pay 11/12 of $18,032. If you can then challenge the assessment and only owe $14,414, you would have an extra $3,600 in your pocket. That said I believe that the assessment is already set for this calender year and you would challenge it for the coming year.

Any success in getting the Tax bill down PRIOR to closing?

Any success in getting the Tax bill down PRIOR to closing?

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