2020 Cook County And Chicago Property Tax Rates Explained
today at 7:30 am
Normally the second half property tax bills for 2020 in Cook County would have been mailed out at the end of June. However, this year they are running 2 months late because of a feud between Fritz Kaegi, the Cook County Assessor, and Karen Yarbrough, the Cook County Clerk. I’ll spare you the details but, apparently, the tax bills depend on calculations that the clerk performs but she refused to do them because of evidence that there were errors pertaining to senior freezes. Eventually the state’s attorney, Kim Foxx, told Karen she had to proceed. So the property tax bills are going out about now and taxes will be due October 1, also 2 months later than normal.
Every year I like to summarize the tax calculation because the way it’s presented is too damn difficult to understand and home buyers need a rule of thumb they can apply when evaluating the property tax consequences of their purchases. In doing so I like to always point out that the tax rate is primarily a function of two factors: how much money the county needs and the total assessed value of all the properties in the county. This year the county decided that they needed $16.1 B vs. 15.6 B last year – a $500 MM increase.
If you will recall there was that off cycle Covid assessed value adjustment (downward) for 2020 that I’m sure some people got excited about. Given the way property taxes work that adjustment, on average, didn’t do anyone any good. However, to the extent that some areas of the city got a smaller or larger adjustment than others, that would have helped or hurt people in those areas by shifting the tax burden around.
On Thursday the Cook County Clerk finally released their annual tax rate report for 2020. The table below summarizes the changes that occurred for single family homes in various sections of Cook County. They skip a few calculation steps which we’ll go through in a minute but the bottom line is that residential property taxes did not go up by enough to cover the 3.2% increase in the budget. The difference was covered by higher increases in commercial properties, which were long overdue but nevertheless drew sharp criticism from those that had been given preferential treatment for far too long.
The tax rate report also shows a sample tax calculation for the city of Chicago using the average estimated fair market value. The calculation is a bit more convoluted than it needs to be but I can simplify it for you. I take all those factors and percentages and multiply them together to come up with a tax rate of 2.2% of the estimated fair market value. But that’s before adjusting for the homeowner’s exemption which reduces the tax bill by $10,000 x 6.911% = $691.
Notice that the effective tax rate went up from 2% to 2.2% because valuations went down due to the Covid adjustment. As I was saying above, that adjustment didn’t do much good ON AVERAGE. With the 2021 valuations coming in considerably higher than 2020 I would expect the tax rate to go back down to 2% or possibly even lower.
Not everyone has gotten their 2021 re-assessment notice yet but if you did chances are that it’s stressing you out because of a significant increase. But, as I pointed out above, it’s difficult to know what that means for your taxes because it depends on what happened to everyone else. So, just hang onto your seat for another year and in the meantime appeal your valuation. That’s the #1 rule in Chicago: always appeal your assessed valuation no matter what.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry 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.