About 2 years ago I posted on how Chicago Property Taxes Are Some Of The Highest In The Nation And Heading Higher. In that post I showed some of the analyses of property tax rates by state but those averages don't even begin to tell the whole story of Illinois property taxes. It's actually much worse in some other Illinois towns.
Let's first revisit the current rankings by state, courtesy of WalletHub. Their map below is interactive and shows you the state rankings. Illinois is 50 out of 51 - i.e. the second highest average property tax rates in the nation. Clicking on the link below the map takes you to their article which shows Illinois property taxes averaging 2.3% of market value. Keep in mind that Chicago is 2.0%.
But it turns out that some suburbs of Chicago have much higher property tax rates than 2.3%. Absurdly higher. Park Forest is a great example. It appears that the property tax rate is around 7.5% there as exemplified by the most expensive sale in Park Forest in the last month at 9 Lakewood Ct. The county has the home valued at $100,930 and the tax bill is $7,257. In theory, when they see what the home sold for, the property taxes should eventually go up to 10,174, which would be a little less than twice the 30 year mortgage payment with 20% down on a $141,500 home! No wonder homes are so deceptively "cheap" there.
In that case the county's valuation worked in the homeowner's favor. However, sometimes it's just the opposite as in the case of the home for sale at 872 Rosedale Terrace in Crete, IL. It's a 6700 sq ft short sale that they have been unable to sell while listed at $341,000 and the annual property taxes are over $37,000/ year! That's not a typo and that's probably a major factor in why the home has not sold. A huge part of the problem is that the county has it valued at just over $900,000 - almost 3x the current list price. The tax rate works out to around 4.1%, which is less than Park Forest but still tremendously high by national standards.
The crazy thing with valuations is that the more a property is worth, the higher the property taxes, but if the tax rate is high enough then the higher taxes actually end up depressing the valuation of the property. In other words a high value will result in a low value :)
I'm sure that other states have pockets with exorbitant property tax rates also. However, Illinois has a lot of these apparently and these towns have put themselves in a death spiral. No wonder people are leaving Illinois in droves.
As a side note, the new tax plan will probably end up limiting property tax deductions or make it less worthwhile to itemize your deductions. Consequently, many experts are recommending pre-paying the first installment of your 2017 property taxes, due in 2018, before the end of this year to maximize your deductions this year.
#ChicagoPropertyTaxes #IllinoisPropertyTaxes #PropertyTaxes
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.