Property tax deadlines have been pushed back, but lenders want cash

What the helmsman gives, the banker often takes.

January 26 21 – On November 24, 2020, the Cook County Board of Commissioners at the request of the Commissioner John P Daleyvoted to give Chicago and Cook County homeowners a 60-day extension of 2020 property tax payments because of the pandemic.

The extension, titled the COVID-19 Tax Relief Ordinancehas postponed the deadline for paying the first tax installment from March 2, 2021 to May 3, 2021. The second tax rate is due on October 1st instead of August 2nd.

The campaign is intended to relieve thousands of homeowners who pay their property taxes directly. The extension means there will be no interest on arrears on billions of dollars in tax bills.

However, don’t expect tax breaks if your bungalow or duplex is mortgaged. Most tax payments are paid by mortgage holders online from interest-free property tax escrow accounts held by banks and mortgage companies.

“Banks and mortgage companies will generally not recognize the extension of the 60-day pandemic tax payment and will dutifully pay taxes to Cook County on March 2 and August 2 of this year,” it predicted Michael Griffin (left), a real estate tax attorney in Chicago.

Illinois lenders are not required to pay interest on tax escrow accounts. However, lenders in 15 states — including California, Iowa, Minnesota, New York and Wisconsin — pay escrow accounts for interest. In Illinois, borrowers have the option of opening an interest-bearing account that is used to pay property taxes when they close a property. If a mortgage is repaid to 65 percent of its original amount — and the loan is not in default — the lender must notify the borrower that they can cancel the escrow and pay the taxes directly.

Cook County Assessor Fritz Kaegi Recently, real estate owners, including beleaguered homeowners, in Chicago’s affluent neighborhoods from River North and Old Town to Lincoln Park and Lake View have given a glimmer of hope — lower tax bills.

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Kaegi sent “COVID-19 Valuation Adjustment Letters” to thousands of Chicago property owners, noting that the pandemic has caused a “significant economic downturn and lower property values” depending on the type and location of the property. Unfortunately, these temporary cuts only applied to 2020, as all of Chicago will be re-evaluated in 2021.

In Chicago, the reduction in COVID-19 assessment score is an average of 10 percent. They range from a low of 7.5 percent in Lake View, Lincoln Park and Uptown to almost 8 percent in Bronzeville, Loop, Old Town, River North and South Loop. The reductions are about 9.5 percent in Rogers Park and West Ridge and range up to 12 percent on Chicago’s South Side.

The appraiser also reduced ratings for two- to four-unit multi-family units in Cook County from 9.3 percent to 15.4 percent.

Examples of COVID-19 rating reductions in the Old Town include:

• The owner of a Victorian four-family brick home received a $13,083 reduction in appraised value from $130,828 to $117,745. He paid a $26,285 property tax bill for the property in 2019. The first installment of the 2020 tax bill, which accounts for 55 percent of last year’s bill, is $14,456.

Image provided by Don DeBat

Despite reducing the COVID-19 rating, in anticipation of higher taxes in 2020, the lender increased the owner’s monthly tax filing payment by $515 to $2,852 from $2,337 for January-April 2020.

• The owner of a six-bedroom Victorian apartment received a $11,145 reduction in appraisal from $111,443 to $100,298. The owner paid a property tax bill of $21,701 on the property in 2019. The first installment of the 2020 tax bill, which accounts for 55 percent of last year’s bill, is $11,935.

Mayor Lori Lightfoots The 2021 pandemic budget will include a $93.9 million property tax increase as part of a $1.6 billion property tax hike. About $34 million of the property tax hike is linked to future CPI increases.

The new budget rules will oblige landowners to pay either an annual property tax increase of 5 percent or a CPI increase, whichever is lower. The Lightfoot administration says the increases are approved annually by the Chicago City Council.

Lightfoot has argued that the “modest” 1.3 percent property tax hike is necessary for homeowners. A bungalow owner with a $250,000 property sees a $56 increase in the tax bill. But pricier homes could see an increase of hundreds of dollars.

Photo by Jim Roberts.

Photo by Jim Roberts

“Every homeowner should review their most recent tax return to see if they received the correct exemptions, and contact the appraiser if the exemptions are incorrect,” Griffin advised.

Property taxes for 2020 are expected to increase when the second installment of the bill is due on October 1, 2021. However, predicting a hefty property tax hike this year really focuses on two jokers – the tax rate and the state’s equalization factor. which cannot be contested by the taxpayer.

The adjustment factor, or “multiplier,” is determined each year for Cook County to align property tax assessments with other parts of Illinois. The adjustment factor is determined by the Illinois Department of Revenue.

Property owners who think they are overvalued should appeal now, Griffin advises. Visit the Cook County Assessor’s website to find comparable properties or to start the appeal process. The assessor has completed the 2020 appeals.

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