You just got a notification from TaxProper that your appeal was successful — congratulations! Now how does that reduction translate into you saving money?
In short, your savings are reflected on next year's 2nd installment tax bill, and then lasts up to three years until the next full re-assessment.
Unfortunately the journey from a successful property tax appeal to seeing savings in your pocket can be difficult to understand, because the way your property tax bill is calculated is very opaque and confusing.
The easiest way to explain this concept is with an example. Your property tax bill is based on your assessment, a state equalization factor, the local tax rate, and any exemptions you qualify for.
Tax = (Assessment *10% * State Equalization Factor - Exemptions) * Tax Rate
The State Equalization Factor and Tax Rate can change slightly year over year, but let’s assume they stay the same to keep things simple. The state equalization factor is usually around 3, and the typical tax rate is about 10%. For a homeowners exemption, you insert $10,000 into the formula.
Let’s say your 2019 Assessment was $300,000, and you claim the homeowner’s exemption. Your total 2019 tax bill would be:
2019 Tax Bill = 10%* ($300,000 *10% * 3 - $10,000)
2019 Tax Bill = $8,000
In this example, the assessor’s office sends your 2020 assessment notice and proposes that your assessment remain the same for 2020 at $300,000, and you have 30 days to appeal. If you don’t appeal, and the tax rate & equalizer stay the same, your total 2020 tax bill will remain the same as well. Remember, the tax bill comes in 2 installments, the 1st Installment being due in March of the following year, and the 2nd installment being due in August of the following year.
It’s important to note that by law, the 1st tax installment for 2020 is simply 55% of what your total 2019 tax bill was. Then, the 2nd installment reflects any remaining balance due after considering new assessments, tax rates, and exemptions. That means that any savings that TaxProper gets you will be reflected on the 2nd installment tax bill that you pay the following year.
Here’s how that timeline plays out in this example:
What would happen instead if you had a successful appeal filed in 2020? Let’s say TaxProper’s appeal reduces the proposed 2020 assessment from $300,000 to $250,000.
The 2020 tax bill would then be $6,500. The 1st installment would still simply be 55% of the 2019 bill, and then the $1,500 savings would be reflected with a lower 2nd installment tax bill.
Here’s how that pans out:
In comparing both scenarios, you can see that the 2020 1st installment bill will be the same regardless of if you appeal or not. The $1,500 savings are realized on the 2nd installment bill that is usually due on August 1st of the following year.Property Taxes
If you’ve ever thought any of the following, you should read this:
“I won my appeal last year, so why bother?”
“My assessment seems low - I don’t want to risk that by appealing.”
All three of these are common misconceptions. The fact is - you should always appeal your property tax bill. Even if your assessment looks fair, or if you’ve previously won an appeal, there is often room for improvement. As the housing market changes, and people around you appeal their own assessments, your property tax bill can often end up unfair.
So there’s always a chance that you can save. But here’s the most important reason why you should be appealing every year: you can never lose.
The county assessor can never raise your assessment because you appeal. And with taxProper’s pricing, if you don’t save, you get a full refund.
That means your worst case scenario when filing a taxProper property tax appeal is trying again next year.
Imagine you were in Vegas playing roulette and they said “On this spin, if you land on red you win $500; anything else you’ll have to try again next year.” You’d spin that wheel every time.Property Taxes Property Tax Laws
Your property tax bill is the biggest determinant of how much you pay into your escrow account every month, and a successful property tax appeal can impact how much you pay every month. This article explains how a successful appeal can impact your escrow payments.
First, some background on escrow accounts. An escrow account’s primary purpose is to provide additional assurance to a lender that the property underlying a mortgage is protected. By requiring homeowners to pay into an escrow account, a lender can be confident that property tax bills and insurance premium are paid on time.
The amount paid into your escrow account for property taxes can vary, but there are usually three elements that are important to keep track of.
Minimum balance: This is the minimum amount required to be in the account, and is usually equal to 1/6th of your total yearly property tax bill — or two months worth of payments. If you go under this amount, your payments will increase until you are above the buffer.
Maximum balance: This is the maximum amount your lender is allowed to require in the account. This number is often set by state statute, and if your account balance goes over, you should receive a check from your escrow provider.
Monthly payment: This is the monthly payment required, which is roughly 1/12th of the total cost of your annual property tax bill.
Your escrow account servicer is required to monitor your property tax bill and adjust the required payments if your property tax bill changes. If you get a successful property tax reduction, you can expect your required payments to change the next time your tax jurisdiction uses your assessment to calculate your tax bill. Because bills are not always released immediately after a reassessment, it can sometimes take several months for the monthly payment to adjust.
If it looks like your escrow account servicer has not adjusted your monthly payments, you should contact them and let them know what the current tax bill is.Property Taxes Cook County
The Cook County Assessor's office has just published the by-township property tax appeal deadlines for 2020.
Please note, these value are subject to change (and often do).Property Taxes Cook County Property Tax Laws
Property taxes are the second biggest expense owners of real estate face, after mortgage servicing. Fortunately, property owners have the ability to reduce this cost by appealing their property tax bill. This article explains how in four steps.
1. Check if you are overassessed
Your property assessment is the key factor that determines how much you pay in property taxes, because that is the value the property tax rate is applied to. The lower your assessment, the lower your property tax bill.
There are two easy ways to determine if you are overassessed. The first requires you to look at how much properties similar to yours are assessed. If a property that is identical to yours is assessed at a lower amount than yours, it's a good indicator you are over assessed. The second requires you to look at how much similar properties to yours were sold for. If the true market price is lower than the assessment, your property could be overvalued by the assessor.
2. Get the information you need to appeal
If you are confident your property is overassessed, you need to collect some additional information that is specific to your property. First, you need to figure out which of the 38 townships in Cook County your property is in. Once this is determined, check on the Cook County website when your township's appeal period opens. This information will let you know what the deadline is for submitting your appeal.
3. Determine what type of appeal to submit.
There are three types of appeals you can submit: comparable sales, lack of uniformity or economic value.
Comparable sales requires you to submit evidence that similar properties have been sold for less than your assessment.
Lack of uniformity requires you to submit evidence that similar properties are being assessed differently.
Economic value requires you to submit three years of income and expense information, but this type of appeal only applies to income producing properties.
4. Submit and wait
After you have gathered your evidence, submit it to the Cook County Assessor's Office. It's critical that you review all of the applicable appeal rules prior to submission, because failure to comply can result in an appeal denial.
Depending on the appeal backlog, it can take several weeks or months for the Assessor's Office to provide you with a decision.Property Taxes
The most common misconception we encounter at taxProper involves two key definitions in the property tax business: assessed value and tax rate. For many, the two concepts are interchangeable and homeowners think of them in the same way. But understanding the difference between the two is key to understanding a property tax appeal.
Assessed value is the value that the County Assessor values your home at. For residential properties, this value comes from a software program known as Computerized Mass Appraisal (CAMA). The Assessor reviews all of the different data points collected on homes and compares them to recently sold properties that have similar data points. In other words, a software automatically determines the value of your home every assessment cycle.
Taxes rates, on the other hand, are dependent on the policies of local governments. All of the local government units that have taxing authority individually decide how much money they want to raise through property taxes. This is known as the levy. The levies are then added up to get the total levy applied to the jurisdiction. Tax rates are determined through simple division, adding up the total value of all property and dividing it by levy.
A property tax appeal does not appeal the levy or the tax rate calculated — which are questions of governmental policy. Instead, a property tax appeal contests the assessed value determined by the Assessor. A well crafted appeal will provide compelling evidence that the value set by the Assessor is incorrect, and, if it is successful, the appeal reduces the assessed home value.
Because the property tax rate is applied to the assessed value of the home, a reduction in assessed value corresponds with a reduction in property taxes.