"Homeowner Exemption" for property taxes

Rental Property Investor · Kirkland, WA · Member since 2016 · 60 posts · 19 votes

Hi, I am in my due diligence phase of a turnkey property in Hazel Crest, IL. The property currently has a "Homeowner Exemption" which appears to be some property tax discount for those that make the place their primary residence. Taxes seem to be $243/month, but I'm assuming that once I buy it as an investor (it won't be my primary residence) that taxes will go up?

Anyone have any clarity on the subject?

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Brie SchmidtBusiness Member

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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes

@Daniel Benoit and @Russell Pitts - isn't this what cased a fraud investigation in cook county?

https://chicago.cbslocal.com/2017/05/11/2-investigators-company-accused-of-dodging-600k-in-property-taxes/

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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
10y
Originally posted by @Russell Pitts:

Hi, I am in my due diligence phase of a turnkey property in Hazel Crest, IL. The property currently has a "Homeowner Exemption" which appears to be some property tax discount for those that make the place their primary residence. Taxes seem to be $243/month, but I'm assuming that once I buy it as an investor (it won't be my primary residence) that taxes will go up?
Anyone have any clarity on the subject?
Yes, the homeowner exemption is only if you live there. You can look up the property here http://www.cookcountyassessor.com/Search/Property-...
Once you pull up the property record look for the exemption tab, there you will see how much the current exemption is
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Russell Pitts
OP
Rental Property Investor · Kirkland, WA · Member since 2016 · 60 posts · 19 votes
10y
Got it, thanks. I was able to find it. The 2015 tax bill plus the amount of the exemption match what the turnkey provider is telling me what my tax bill would be.
On another note, as I'll be doing business in Chicago I'm looking to build a network of contacts who can help in my transactions and are outside of this turnkey provider's "recommended contacts". I'm currently looking for a property inspector and a property management company who would know about the Hazel Crest neighborhood. Do you know anyone?
Thanks,
Russell
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
10y
Once you take it over as a non owner occupant you will loose said exception.
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
10y
Russell,
I previously worked in the Cook County Assessor's office for 20 years and now work for a tax firm that specializes in reduction of real estate taxes. There is an option to properly keep the exemption if you are interested.
Dan
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Russell Pitts
OP
Rental Property Investor · Kirkland, WA · Member since 2016 · 60 posts · 19 votes
10y
Yes, I would be interested. Tell me more :)
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
10y
It get's a little tricky and there would need to be a good relationship between the tenant and landlord. As long as the tenant is living there as of January 1st of the year in question and pays the real estate taxes they would be eligible for the exemption. So two things would need to happen. First, the lease would need to include language that the tenant is responsible for the real estate taxes. Second, the tenant would have to pay for the taxes from their own account and be able to show the proof of payment if the Cook County Assessor ever hit you with a erroneous homeowners exemption notice.
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Russell Pitts
OP
Rental Property Investor · Kirkland, WA · Member since 2016 · 60 posts · 19 votes
10y
Interesting. Regardless of who pays the taxes, isn't the exemption for the owner of the home and only if it's the owner's primary residence? Wouldn't the tax assessor see that I am the owner (or my LLC) and that I live out of state, then see that the taxes were paid by the tenant and therefore have mismatching information? I'm just assuming here, but if the system doesn't work like this then all the better for me I guess.
If the Cook County Assessor wanted proof of this exemption, is all that is really needed is proof that the tenant (not the owner) paid the taxes?
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
10y
Russell,.
Per the Assessor's website.
You can receive the Homeowner Exemption if you own or have a lease or contract which makes you responsible for the real estate taxes of the residential property. It must also be used as your principal place of residence for the year in question.
The Assessor would only see the tenant paid the taxes after you were hit with a erroneous homeowners exemption. At that time you would be able to show occupancy and proof of the taxes.
Dan
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Carrianne Mucho
Lender · Roseville, CA · Member since 2011 · 205 posts · 86 votes
10y
@Daniel Benoit - interesting concept but hardly sounds worth the hassle. Here in California, the homeowner's property tax exemption is only $7,000 of assessed value ($70/year off your tax bill). Perhaps it is higher in other areas?
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
10y
The exemption amount is about $475 in the City of Chicago to over $1,000 in the south suburbs of Chicago.
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Russell Pitts
OP
Rental Property Investor · Kirkland, WA · Member since 2016 · 60 posts · 19 votes
10y
looking at the specific property I'm buying, the exemption is $1469/year. Seems worthwhile.
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
10y
Great let me know if you need anymore information or help.
Dan
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Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
8y
@Daniel Benoit and @Russell Pitts - isn't this what cased a fraud investigation in cook county?
https://chicago.cbslocal.com/2017/05/11/2-investigators-company-accused-of-dodging-600k-in-property-taxes/
Podcast Guest on Show #132
Second City Real Estate4.821 Reviews
Website View Page
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Daniel Benoit
Professional · Chicago, IL · Member since 2016 · 13 posts · 2 votes
8y
Yes it was an erroneous exemption case matter.
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Rich Annunziata
Member since 2018 · 7 posts · 0 votes
8y
I
My tenant in Park forest,cook county just paid the 2017 second installment out of her checking account after we deposited in her account the amount we had set aside for this purpose out of the rent.We have a rider on the lease stating she pays the real estate taxes.
What is my next step and when do I do it?
Also,is a certified check made out to cook county treasurer with her as remitter a good enough paper trail or does it have to be her personal check?
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Russell Pitts the idea of having the renter responsible for the taxes in order to gain the exemption is interesting, however, I would think of some of the down sides. First and foremost, from a scale ability perspective this is an absolute nightmare. Secondly, if you somehow mess up and don't pay the taxes you could have the property taken for back taxes. Lastly, you are probably in a C class area if you are buying turn key. Trying to deal with this in a sophisticated manner with C class tenants could be a nightmare. Many of my tenants in my C class buildings have never had a checking account, and one very nice retiree (who pays like clock work) is doing all his business at the local currency exchange.
I am not saying this is not worth the time, but I am trying to provide a different perspective!
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David Stewart
Real Estate Agent · Ocala, FL · Member since 2015 · 29 posts · 14 votes
8y
Another thing to watch out for besides properly handling homestead: Many states have a cap on yearly increases, and that holds only for each owner. Once a property transfers to a new owner, the cap’s effect is lifted, and property taxes are assessed on the new owner at the just, market, or whatever label the state gives it, value. So both the cap and the homestead exemption will come off, and the taxes can be, probably are, significantly higher than the previous year’s taxes on the former owner.
And 2015 taxes are likely to understate taxes even more, being so old.
See if your county assessor has a property tax calculator on its website.
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Rich Annunziata
Member since 2018 · 7 posts · 0 votes
7y
Hi,
As a landlord in cook county,
I wanted to ask Dan Benoit if a cashiers check purchased by the tenant with all info on the check ,pin # and purchased by tenant name and made out to Cook County Treasurer, is sufficient or does it need to be from their checking account?
Thanks,
Rich
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