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Property Tax

The county needs money to operate, especially for education, and you get charged property tax.

One of the biggest chunks of your property tax goes toward public education. The county needs this money, plus money to operate the county government, and there is therefore no way you are going to avoid paying property taxes.

The amount that each person pays for property tax is based on the value of the property owned.

Here is what might seem complicated about property taxes. The method of determining property taxes is different in every location.

I will look at DuPage County, Illinois.

DuPage County is divided into nine different townships.

Each township has its own budget for expenses and for revenue.

Why is this important for property taxes?

Because each township needs essentially the same total amount of money to operate each year. So for each township, the total average dollars charged per acre or per square kilometer) of land is close to equal.

In DuPage County, for townships that have mostly cities with high-priced homes, you get a certain dollar amount of tax bill per dollar of property value.

In a different township within DuPage County, where there are mostly cities with low-priced homes, you get a higher dollar amount of property tax per dollar of property value, because roughly the same amount per acre is being charged on average for each township.

This means that in Oak Book, Illinois, in DuPage County, York Township, a two-million dollar home has a property tax amount of approximately $20,000 dollars per year, or 1% per year.

A $300,000 home in the same township has a property tax amount of $5,000, or 1.7% of the property value per year.

In West Chicago, which is in Aurora township, also in DuPage County, Illinois, where average home prices are lower, a $300,000 home can have a property tax of $8400 per year, or 2.8% of the property value per year.

This is why people who want to build expensive homes avoid townships where there are a lot of low-priced homes.

Location makes a difference of thousands of dollars per year in property taxes.

In fact, no matter what sized home you want to buy, you benefit in property taxes by being located in a township with a lot of high-priced homes.

How property taxes are set

Property taxes are set based on the value of each property.

More expensive properties pay more than less expensive properties.

Although each township, or taxing district, collects roughly the same amount on average per acre (or per square kilometer) of land in the taxing district, compared to other taxing districts, the taxing district does not collect the same amount per acre within its boundaries.

Expensive homes pay more per acre than cheap homes pay within a given township or taxing district.

A tax assessor decides how much your property is worth for taxing purposes.

Note that this is not the actual sales price of your home.

If you buy your home from your parents for $1, your property taxes are not going to be based on your home being worth $1.

The tax assessor understands that people will try to get away with such scams if they are able, and so the tax assessor bases your homes taxing value on the sales price of a group of homes in your area, and not on the sales price of your actual home.

If you fix up your home, and it becomes worth more money, then it will be assessed at a higher level.

Here is another odd thing about property taxes. The are based on what is called "assessed value" which is actually 1/3 of the actual value of your property, rather than the actual value of the home.

If this seems designed to confuse you as a taxpayer, then I can't argue. Another odd thing about property tax assessments - They are based on home sales not from this year, but from the previous two years.

This rule helps protect people when prices are rising, but hurts when prices are dropping. (Information applies to DuPage County, Illinois).

What to do about your tax bill

Sometimes, your property tax assessor (person who decides your property tax) has the wrong idea about how much your property is worth.

If he has a low idea of your home's value, you usually don't complain. But if he has a high idea of what your home is worth, then you might want to do something about it.


If you want to lower your property taxes,

then you need to identify the one-month window in September or October when the county accepts petitions to modify taxes.

Then file your petition within that window, and submit with the petition a list of comparable property sales from the previous two years.

 You should also mention in the petition what the date and amount of your purchase was, because it is relevant, but not the only thing that gets considered.

 You get a notice of a hearing, and you go to the hearing and ask for a property tax reduction.  Then you wait for your result in the mail.  

Sometimes you can call the township office where the property is located, right after you buy it, and ask to speak to the assessor, or someone in his office, regarding your recent purchase.  

If you are lucky, the assessor will adjust your assessment based on your purchase price.  It happens sometimes, but not very often.

At your property tax hearing, someone from the tax-assessor's office presents evidence that your home is worth a lot of money, based on other sales prices in your area.

There is a hearing officer who is supposed to make a fair decision of your home's sales value, and its assessed value for tax purposes (assessed value = 1/3 of sales value).

You will have to present your evidence that your home is not worth very much.

You use the comparable home sales from the previous two years that were described in your tax petition, and you also can talk about your home's purchase price, and about things that make your home worth less money, such as its bad condition, or bad location near railroad tracks or on a busy street, or in a flood plain.

You should have some way to describe why your home's problems make it worth less money. It helps if you can demonstrate how other homes with the problems that your home has have sold for less money than similar homes without the same problem (within the last two years).

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