Are you taking full advantage of your property tax breaks?

By James W. Chipman

No matter where you live or what type of property you own, you may qualify for any number of special tax incentives that could save you hundreds or even thousands of dollars.

Illinois may be second in the nation when it comes to the highest property tax burden, but the Prairie State offers its fair share of tax breaks too. Here are a few of the laws designed to help homeowners and businesses cut their taxes.

Exemptions that reduce the assessed value of your home:

• General Homestead: Taxpayers can receive a maximum exemption of $6,000 for an owner-occupied residence ($10,000 in Cook County).
• Senior Citizen: Homeowners age 65+ can receive a $5,000 exemption for an owner-occupied property ($8,000 in Cook County). An annual application is required.
• Senior Freeze: Senior citizens who live in an owner-occupied home and meet certain income levels may have their assessments frozen. An annual application is required.
• Home Improvement: Owners can make up to $75,000 worth of property improvements without an increase in taxes for at least four years from the date of completion and occupancy, or until the next reassessment, whichever is later.
• Returning Veterans: Veterans returning from active duty who own and occupy a property as their principal residence are entitled to a $5,000 exemption for two consecutive years.

Special valuation incentives for homes and businesses:

• Open Space: Land containing 10+ acres that is used exclusively for maintaining natural or scenic resources or promoting conservation of natural resources for the last three years is eligible for an assessment based on “use value,” which is significantly less than market value. Public and private golf courses qualify. This law can help residential owners with large undeveloped tracts and businesses holding excess land for future expansion.
• Farmland: Land is eligible for a farmland assessment provided it meets the definition of “farm” and has been in that use for the two preceding years. This can include any property used solely for a variety of agricultural purposes with no acreage requirement. Farming must be the primary use of the land, and like open space, this assessment is based on use value.
• Solar Heating and Cooling: When a solar energy system is installed on a property, the owner may apply for an alternate assessment. The improvement is then assessed as if heated or cooled by conventional means and with the solar energy system—the alternate valuation is the lesser of these two values.

Special valuation incentives for businesses only:

• Model Home: A dwelling, condominium or townhome used as a display or demonstration model for prospective buyers is to be assessed at its value prior to construction or a zoning classification change. The home can be furnished and even used as an office. The lower assessed value remains in effect until the home is sold or leased for use other than a model home.
• Developer’s Exemption (excludes Cook County): This exemption encourages real estate development by protecting developers from paying higher taxes until a return on investment can be realized. It applies to acreage in transition from vacant land to a residential, commercial or industrial use. The tax break ends when a lot is sold or used for a business or residential purpose, or a habitable structure is built on a lot.

For more information and to determine whether your property is eligible for an exemption or incentive, contact a property tax attorney today. They’ll take you through each step required to qualify your property for these tax reducing benefits.

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