By: Ted Dabrowski and John Klingner

Illinois homeowners can count on higher property taxes next year to be one of the many negative outcomes of COVID-19. Commercial property assessments are expected to drop due to the consequences of the coronavirus and that’s going to leave residential property owners holding the bag.

The lockdown has left many businesses and commercial properties with reduced or no income for months, bringing down the economic value of their properties. Many owners can be expected to appeal their property assessments to reflect that reality. Commercial and office space in downtown Chicago and other suburban areas will also see their assessments drop as businesses shrink their footprint going forward. Nationwide, over 74% of CFOs plan to permanently shift some employees to only work remotely post-coronavirus, according to a recent Gartner survey. 

As commercial values fall – and local governments show little to no willingness to cut spending – homeowners will have to make up the difference.

Illinois State Sen. Craig Wilcox says he’s seen little indication of cities or public unions finding ways to save large amounts of taxpayer dollars during the crisis:

“We’ve seen very few public sector unions kicking in on this ‘Illinois is all in this together.’ There’s not been a halt to automatic COLAs. And there’s not been agreement by the public unions to renegotiate any collective bargaining agreements on a short-term scale. We’ve not seen significant layoffs. I don’t think we’re going to see lower tax levies come Nov-Dec of this year.”

A shift in the state’s tax burden toward households has been going on for decades. Residential property owners paid about half of the $11.7 billion in total property taxes 25 years ago. Today, they shoulder nearly two-thirds of the $31.8 billion property tax burden.

Property tax appeals

Property reassessments after an official state disaster like a tornado or a flood are commonplace in Illinois, but COVID-19 is a far different kind of disaster – commercial properties have lost value due to the state’s lockdown, not physical damage. 

Regardless, many property owners will likely use existing appeal laws regarding disasters to request lower assessments. For example, McHenry and Lake County commercial properties are allowed to appeal their assessments to reflect up to a 50 percent vacancy in their businesses during an affected period.*

Similar appeal rules in other counties will cut commercial assessments across the state and the heavily commercial Northeast region will obviously see the biggest reductions. Meanwhile, residential properties will get no similar “disaster” relief. That means, all else equal, homeowners are going to bear a bigger share of the tax burden.

Reassessing Cook County commercial properties

When Cook County Assessor Fritz Kaegi took office in 2018, he was determined to shift more of the county’s property tax burden on to businesses. The assessor has worked to raise commercial assessments and lower residential assessments to correct what he called a structural imbalance in property taxes. Now Kaegi is preparing to do the exact opposite in the wake of the pandemic. He plans to reevaluate all properties with an eye toward cutting commercial property assessments. From Crain’s:

“Kaegi says the sweeping reassessments are necessary as the coronavirus wreaks havoc on the economy. Commercial landlords are expected to see a significant reduction in rental income, as stores and restaurants remain closed. Similarly, residential landlords face uncertainty in their ability to collect rent as unemployment numbers reach record highs.

Empty offices are sure to make a big difference in the county’s commercial value going forward. The Gartner survey found nearly a quarter of companies nationwide plan to shift more than 20 percent of their employees to remote work. For example, Morgan Stanley’s CEO says they’ll need “much less real estate” in the future as employees have “proven we can operate with no footprint.”

The news is especially bad for Chicago homeowners, as the city is more reliant on commercial properties than most areas. Not only will they get hit with having to pay a bigger slice of the property tax pie, but the pie is expected to grow significantly. Mayor Lori Lightfoot says Chicago faces a $700 million budget deficit and in the absence of structural reforms, property tax hikes are the most likely way to fill the gap. Homeowners will end up getting hit with a double whammy of increases.

Overall, Illinois homeowners already pay the highest property taxes in the nation. It’s hard to imagine many residents putting up with paying even more.

The smart thing to do would be for local governments to find ways to cut costs in the wake of the coronavirus crisis. But given their track record, don’t count on it.

*The reassessments do not allow for a reduction in the value of the land and any help from the federal government is taken into account.

Read more about COVID-19 and Illinois property taxes:

62 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Poor Taxpayer
3 months ago

Not just higher taxes, but MUCH HIGHER TAXES.

3 months ago

My spouse and i were really excited when Louis managed to finish off his inquiry by way of the precious recommendations he made in your web site. It is now and again perplexing to simply possibly be giving away information some other people may have been making money from. And now we discover we have the writer to appreciate because of that. Those explanations you made, the easy blog navigation, the friendships you help to engender – it is most powerful, and it’s really letting our son and the family imagine that the topic is cool, which is quite indispensable.… Read more »

Christo
3 months ago

Tax -rates may go up but tax value assessmates should go down. The loss of business both professional and retail(stores and restarrantes) and recreational facilites and the increases in crime and decreases in public services should be recognized as reducing the value of houses in such areas affected. $300K houses in a nice neighborhood that that turns into a food desert ghetto wasteland are no longer worth $300K. Need a homeowner’s class action lawsuit to force across the board lower assessments on residential propeties , becuase the government has failed to maintain “society” and the neighborhoods that impart part of… Read more »

Susan
3 months ago
Reply to  Christo

Lowered assessments do not bring lowered tax bills. Only lowered levies from taxing bodies, primarily schools, will result in lowered tax bills. As you know, when one property tax parcel’s bill is lowered, others must pay more to cover the cost of that reduction. The overall levy must be paid by someone. When Pritzker’s property tax bill was reduced, due to reduced assessment, some say fraudulently, all the other taxpayers in his taxing district had to pay a little extra to make up for his $300,000+ tax bill reduction. His lowered assessment did not lower the amount that schools and… Read more »

Laurel
3 months ago

I can’t afford a higher increase! We need need need to ban together and everyone just stop paying them. If course it only works if everyone would get on board. Imagine…if only.
Well we will probably see a lot of tax sales next year. Hell, I might be one of them.
Anyone want to buy my house??

Indy
3 months ago
Reply to  Laurel

If you want lower taxes and a better life for your family then move to Indiana.

Lyn P
3 months ago
Reply to  Laurel

In this here neck of the woods there isn’t even a critical mass saying NO to mask directives. Not gonna happen on the tax front, much as I agree. Something like Indy’s suggestion more effective, sounds like you’re considering.

Susan
3 months ago

The most straightforward way to analyze destructive effects of aberrant property tax rates is to compare apples-to-apples: Percentage of household income expenditures. Luckily there is national data readily available from BLS for everyone willing to analyze this issue without political bias. In America (and Chicago to some degree) every household spends less than 4% of mean or median household income on property taxes, across all income brackets. But look at Illinois collar counties; that percentage of household income which must be spent on property taxes is at least doubled to 8%. In Woodstock IL it has recently held several years… Read more »

Freddy
3 months ago
Reply to  Susan

You are correct. Tax’s were the main reason my uncle moved to Colorado some years ago. His home was a few doors down from the old Deeter’s restaurant. He was paying $10K in tax’s and the person he sold it to was paying $14K and I think lost it in foreclosure and it was sold for about $180K almost down $350K in value. He now has a home in CO and pays about $1700. Buys a new car every few years from the tax’s he is saving and most important his home is appreciating every year. This excessive taxation garbage… Read more »

Susan
3 months ago
Reply to  Freddy

Underassessed properties have a great impact on property tax bills of fairly assessed property. Especially when you consider equalization factors that raise assessments across the board by significant amounts.

It is interesting that there is no mechanism for taxpayers to protest or appeal others’ underassessed properties. There would have been several grounds to appeal Pritzker’s ( allegedly fraudulent) adjacent Astor st. mansion assessment, including his failure to prominently post the property as vacant (required by Chicago law) and his failure to timely present ‘vacancy’and ‘uninhabitable’ declarations paperwork required by clear reading of relevant statute.

Poor Taxpayer
3 months ago

Fill up the gas tank and leave the state as soon as possible.
Taxes will be going up, up and away for a long time.
People are fleeing and the taxpayer base is getting smaller by the day.
Kiss Illinois good bye. Destroyed the greedy lazy cops, lazy teachers, and lazy firemen.
Move to Florida if you want to live by them retired at age 45 in luxury homes and luxury cars paid for by the Illinois taxpayers.
Illinois ” Land of Slavery”

DixonSyder
3 months ago
Reply to  Poor Taxpayer

You’re right. This morning I took a dip in the pool, nice one 60×40, had a nice sauna and got ready for the ride to the boat. Took the new Mercedes down to the dock and got out. Stood for a few minutes admiring my new 38 ft, off shore fishing boat. Fully loaded. Took her out for about 5 hrs, 30 to 40 miles out into the Gulf. Caught a nice bunch of sea bass, amber jack’s, mackerel. Had a nice shark on, maybe 6ft, bit off but that’s how it goes. Back home and floating in the pool… Read more »

Last edited 3 months ago by DixonSyder
debtsor
3 months ago
Reply to  DixonSyder

Pilferer.

NB-Chicago
3 months ago

Your not part of the blm/ socialy ‘woke’ narrative/ hypocrisy if your a low income black, brown or whoever strugging to hang on to your dinky home investment in a place like harvey and realize (as wp has written about innumerable times) the onerous prop taxes have made your home worthless and you simply give up and walk away. All to pay in large part for our zero risk/ zero layoff public sec hero’s who may not even live in the communities they serve…where’s the social outrage?, where’s the spinless illinois republican party to press the issue?

Last edited 3 months ago by NB-Chicago
debtsor
3 months ago
Reply to  NB-Chicago

I feel bad for Harvey, Dolton, etc. Those places had ridiculous values back in 2006, with homeowners paying way way way too much for them, and at the first sign of financial trouble, the community members defaulted en mass. The property values never recovered unfortunately and the communities are little more than shells of what they used to be. The same goes for some of those far out exurbs too – no one should pay $400k for a dump in Crystal Lake, ever, but people were all FOMO and buying them up in record numbers.

Jeanne Dominick
3 months ago

Defund Springfield part time politicians pensions

Richard Conklin
3 months ago

Great analysis, and spot on for what’s in store for homeowners in 2021.

Gemini
3 months ago

Screw this sh*t. Florida here I come.

indy
3 months ago
Reply to  Gemini

Indiana is a smarter choice.

daves
3 months ago

I already pay $1,000 / month. We simply can not afford anymore. When we moved here in 1996 it was $450/month. How much higher can this go ?

Susan
3 months ago
Reply to  daves

There is no limit. The levy is divided by taxable property values, that sets the property tax rate. The property tax rate is like a mortgage interest rate except worse in that it rises annually without taxpayer protection or recourse. The best way to analyze whether property tax rates are too high is by comparison to peers. BLS (Bureau of Labor Statistics) is perfect source of what peers (homeowners all over America) spend on property taxes AS A PERCENTAGE OF HOUSEHOLD INCOME. By comparing what p-taxes you are paying to what other Americans are paying to get the same things… Read more »

UnclePugsly
3 months ago
Reply to  Susan

Really enjoyed your thoughtful comment!

When I came to Illinois +30 years ago, my initial impression of the property tax was ‘Why would you do that, it will depress investment and economic activity’. Of course since then, that equation has only become more upside down!!! Kind of remarkable how Illinois has refused to change it’s failed policies. But, we know why.

Freddy
3 months ago
Reply to  Susan

With Ptell the taxing bodies can collect what was LEVIED the year before not billed or collected plus up to 5%. This is before any deductions like homeowners or senior/etc.This is what was not explained when most voted for it. All that was pushed is that tax’s are limited to 5%. Any tax incentives or abatement’s given to anyone those lost tax’s just increase the rate for everyone else so the taxing body never gets less than the year before. The tax rate increases if property values decrease but are limited to a max of 5% on increasing values. For… Read more »

Susan
3 months ago
Reply to  Freddy

And a huge factor causing rising tax rates :TIF. TIF raises expenses (mandatory schooling for TIF freeriders, need for additional police and roads , and of course tge taxpayer-guaranteed gifts to developers and landowners up front).
But to ve clear, there are many PTELL exemptions, including debt payments and payments to pensions OPEB obligations.
So yes, technically, the levy may only rise to 105% of last year’s levy, but the exemption amounts are allowed in addition to that limit.

The Truth Hurts
3 months ago
Reply to  daves

I see and hear this question all the time. Since property can’t flee the state it will always be a go to move by our leaders. They know that as long as a property holds value they will have the ability to tax it. To really answer your question, It depends on the equivalent rent value for your home. Let’s say that value is 3k per month. Let’s also say that your average maintenance cost are $200 per month. Property taxes on your home can continue to rise until it gets closer to $2800. As your taxes rise closer to… Read more »

Susan
3 months ago

I cut to the chase by applying tax rate capitalization theory. Everwhere in America, property is evaluated by Cap Rate for assessment purposes. In America, where social service provision is reasonably priced, a standard valuation of real property is established. Illinois property values lag that valuation by a predictable amount: Illinois homes are devalued at the percentage rate per year which the vost of carry exceeds that in America . In Woodstock IL the differential is 3%. our home value appreciation lag America annually by 3%, because our ptax rate is ~4% while in America the rate is ~1%. And… Read more »

mqyl
3 months ago
Reply to  Susan

In discussing affordability or comparing cost of living to other areas, some people don’t consider the cost of one’s property not appreciating in IL. If you own a $400K house in the Chicago area, you’re losing around $10K a year by that house not appreciating.

Also, most people who moved out of IL because of the PTs could’ve continued to afford to pay them. Many of those people left because of the depressing realization of where that money is going.

Freddy
3 months ago
Reply to  mqyl

Considering that homes in many parts of the country have been appreciating due to lower tax’s and homes like in Rockford were going the opposite way and depreciating the gap between here and wherever you are moving to is huge. A mortgage banker here told me that people are shocked how little if any equity they have and what homes cost if they need to move due to a job transfer. You basically have to start over and that is very difficult for many to do. If you stay you will be taxed to death and may lose everything and… Read more »

debtsor
3 months ago
Reply to  Freddy

Rockford has been declining for decades. It’s too bad too, it’s a nice area with a lot of nature and things to do within 100 mile radius.

Freddy
3 months ago
Reply to  debtsor

Anderson’s Japanese Gardens is absolutely beautiful. Voted #1 in the country. One of the few gems around here. Klehm Arboretum is also quite nice as is Discovery Center. Midway Village/Burpee Museum and Nicholas Conservatory are other good attractions which is close to Anderson Gardens then over to Prairie Street Brewhouse for a bite to eat and sit by the river walk.

indy
3 months ago
Reply to  daves

If you want lower taxes and permanent protection then move to Indiana.
1% cap on property taxes awaits.

The Truth Hurts
3 months ago
Reply to  indy

Median household income is over 9k per year lower in Indiana compared to Illinois. The median household doesn’t pay 9k less in taxes compared to Illinois. Doesn’t really sound like a great choice.

Susan
3 months ago

You have missed the point.
Percentage of household income paid in property taxes is around 3.6% in all of America.
In Illinois it exceeds 10% outside Chicago.
This is true across all income brackets measured by BLS.

debtsor
3 months ago

But the cost of living is far, far lower. I don’t want to turn this into real estate pr0n but:

https://www.zillow.com/homedetails/54593-Dawn-Dr-Elkhart-IN-46514/50602562_zpid/

1,400 sq ft above ground, 1000 sq feet basement, 3/2, 1/3rd acre.

Under contract at listing for $179,000.

Real estate taxes are $1,000 a year.

Last edited 3 months ago by debtsor
debtsor
3 months ago
Reply to  debtsor

Here is grandma’s outdated split level in Niles:

https://www.zillow.com/homedetails/7038-W-Hamilton-Dr-Niles-IL-60714/3530267_zpid/

1,340 sq ft, 4/2, .16 acres
$355,000.

The most recent tax bill without the senior freeze was from 2013, 7 years ago, and it was $5,752. Probably closer to $6,500. I could probably figure it out if I wanted to pull the tax bill online but I’m too lazy right now.

So sure, earn $9k less, but save elsewhere.

debtsor
3 months ago
Reply to  debtsor

I just noticed it’s on a busy street too!

Indy
3 months ago

That’s false.
But keep telling yourself that nonsense to make your fragile insecure mind feel comfortable.
Enjoy having your home become worthless.

The Truth Hurts
3 months ago
Reply to  Indy

“That’s false.”

Really? Which part? Please cite your source. Here is mine.

https://www.census.gov/quickfacts/fact/table/IL,IN/NES010218

At least debtsor made the argument around cost of living. If you are going to bother renting a truck and moving your family I have no idea why you would stop in Indiana. Once the truck is packed up you might as well keep going to Tennessee or some other southern state.

debtsor
3 months ago

“If you are going to bother renting a truck and moving your family I have no idea why you would stop in Indiana.” Because your family or business interests are still in Illinois and it’s a reasonably priced state that’s a close drive? Just for example, Elkhart Indiana is the RV capital of the world. It’s been booming for a long time except for a rough patch during the last recession. It’s booming now with the corornavirus shutdowns sending a lot of families camping. Indiana is a fine place to live with a lower cost of living and without the… Read more »

Last edited 3 months ago by debtsor
DantheMan
3 months ago
Reply to  debtsor

Good comment debtsor. The way I look at it, if your going to do the big move, most people would prefer a warmer climate, yet many still want to enjoy the 4 seasons. That rules out northern states and Florida. Indiana is a better tax situation, however if you go further south Tennessee is even better, plus being a more conservative state, you need not worry about it doing the insane things liberal states do that drive up taxes. It’s a better long term bet.

Susan
3 months ago

The fact of $9000 median income differential (Il vs. IN) cited is irrelevant without other relative data. A household budget has 100% to spend every year onvarious categories like food, shelter, transpo, insurance and savings, clothing, discretionary… I believe to understand magnitude of damage done to Illinois taxpayers we must analyze effect on household budgets whose savings and discretionary percentages of budgets are wiped out by aberrant high percentage of hh income taken for ptaxes. Why? Because money taken in taxes in outlier amounts is money that household does not have remaining in its budget for other expenditure categories. Illinois… Read more »

Indy
3 months ago

Of course you have *no idea*
When you fill your mind with lies & Ignorance of causes you to become our of touch & intolerant

DantheMan
3 months ago

“No retreat from Illinois” seems to be the motto of a few Wirepoints commentators. Another segment of commentators (including myself) have a vastly different viewpoint. We see a futile situation for homeowners. When you find yourself only armed with a rock as a tank rolls towards you, it doesn’t matter if you have the moral high ground. The time to fight and save Illinois has regrettably past. State leaders have completely rejected Wirepoints suggestions for reform. If another election was held today, it would undoubtedly result in similar results. The media grossly misrepresents facts and there is no reason to… Read more »

Last edited 3 months ago by John Klingner
debtsor
3 months ago
Reply to  DantheMan

You’re absolutely right except that, despite the progressive policies, the upper middle class in IL gets a pretty good deal. A $400,000 house here is $1,000,000 in nearly every other major city (SF, LA, NYC, Seattle, DC, and so on). The schools are pretty good too in a lot of area. There are, for the time being, still a ton of high paying jobs with numerous prestigious companies. The nickel and diming taxes are a real drag but for those households that can earn over $100k it is relative doable. It’s the middle class crowd that gets squeezed. Things will… Read more »

Susan
3 months ago
Reply to  debtsor

Your premise is factually inaccurate. Percentage of household income spent on property taxes in Illinois is extraordinary even in higher income brackets. Look at BLS Household Expenditure Surveys. You can pull up the Survey which breaks down expenditures by household income categories. There indicate that Percentages of Household Income spent on property taxes in all income brackets averages 3.6%, within a range of about 3%-4%. Consider Illinois collar counties, with property tax rates of 3%-4%+, hh incomes of $60,000 median value to $75,000 average, and home values median $170,000 (Woodstock IL, 4% property tax rate) to $300,000 in 3% property… Read more »

The Truth Hurts
3 months ago
Reply to  Susan

“Your premise is factually inaccurate.” Actually his premise is spot on. You are only looking at property taxes. His point is a 400k house in Chicago would cost you $1 million dollars in other major cities. So yes property taxes are higher here but the purchase price and ultimately the borrowing (or opportunity cost) is lower here. Sure these high property taxes drag down the value of the property but that is exactly what makes it affordable to the next home buyer. A million dollar home with a 1% property tax would still cost more to own than a 400k… Read more »

debtsor
3 months ago

And also, the nickel and dime taxes are easier for high income earners to pay. The gas tax increase will be awful for someone making $40,000 a year, but for the $140k household with good jobs at Allstate, Jenner & Block, Kraft, or any other corporation around Chicagoland, it’s easier to handle. We all pay the same car title registration fees, the same sales tax, the same liquor taxes, and so on.

Susan
3 months ago

Factually inaccurate again.
PTaxes do not decrease as a function of falling property values
(The rate just increases).
And 3% of 400,000 doesnt equal 1% of $1 million

The Truth Hurts
3 months ago
Reply to  Susan

Stop calling people inaccurate when you clearly don’t understand. I suggest crunching the numbers yourself if you don’t believe me.

Never said property taxes decrease as property values decrease. In fact my statement was, “As property taxes increase home values decline.”

Also, 3% property tax of 400k plus the holding cost (either mortgage or opportunity cost) is less than 1% property tax and the cost of a million dollar mortgage. You are not factoring in the actual cost of the original investment.

Susan
3 months ago

Lets consider the purchase today of a $400 k home in Illinois today vs. Indiana, out 5 years. First, this must be a “used ” home in Illinois which has already depreciated, unless you are suggesting that per-square-foot construction costs are lower in union-centric Illinois than elsewhere? So family 1&2 purchase $400 k homes in respective states, and for 5 years family 1(Ill) pays 3% ptaxes of $11000 (which deducts homestead exemption ). Family 2 (ind) pays 1% ptax of $4000. Family 1 is out of pocket losses of $7000 annually compared to family 2 , for no value added.… Read more »

UnclePugsly
3 months ago
Reply to  DantheMan

Poland eventually won back its freedom by a very determined group of rock throwers not giving in.

DantheMan
3 months ago
Reply to  UnclePugsly

After how many years?

indy
3 months ago
Reply to  DantheMan

And the no retreat from Illinois will enjoy having their lives ruined.

Douglas
3 months ago

Crains is reporting that the state is using federal money to pay down unpaid bills. I say we all should send the federal government our property taxes for payment.

The very fact we pay taxes on property we are supposed to own is outrageous! Taxation on owned property should end.

StvOh
3 months ago
Reply to  Douglas

Always surprised me that it was deemed Constitutional, per the takings clause.

Illinois Entrepreneur
3 months ago
Reply to  StvOh

The Constitution seems to have very little meaning anymore. Leftists have invaded just about every institution in America, and now it appears they have cowed the Supreme Court. It is trite to say that this country “is in for some dark times,” but we really are entering a very dark period where emotions and collectivism reign supreme over reason, rationality and the rule and precedent of centuries of law. Our “elites” are playing a dangerous game of patronizing these Marxist organizations, thinking that it will pass, or won’t cost them much. The Supreme Court is legislating from the bench, and… Read more »

daves
3 months ago

yes we are entering dangerous times make sure you can defend yourself and your loved ones.

Lyn P
3 months ago

The overarching description of Marxist Takeover covers well (sadly) all the impacts and changes to the U.S. we are witnessing, with only one direction for the near future. Some commentators have been watching/noticing for the past 10-20+ years but even the brightest of them have been blind-sighted at these recent bombshell events. CV-19 is the most effective yet horrifying psy-op being used to accelerate these takeover goals. Those who think anything short of a Revolutionary War Revisited will work, do please elucidate.

Freddy
3 months ago

The little upside of PTELL counties is they are limited to raising tax’s by 5% or 1/2 of inflation which ever is less. Home rule within ptell county may have additional taxing powers. They could add new tax’s or have Covid tax? On my tax bill pension payments are broken down by taxing body like parks/airport/etc and there are a lot and it’s never enough. Think of how much Illinois taxpayers owe. The entire fortune of Bill Gates/Warren Buffett/ and Jeff Bezos should suffice with a few billion to spare- $345 Billion.

UnclePugsly
3 months ago

Some counties have property tax ‘caps’ – increase per annum of only so much for rates I believe. Also, in Central Illinois many homes have been reassessed significantly downward already due to a collapsing home market.

Pritzker’s Covid19 lockdown is accelerating the economic and fiscal decline for state and local governments.

Admin
3 months ago
Reply to  UnclePugsly

Many counties do have PTELL, which will limit the amount the total levy can go up (excluding tax revenues from new properties). That said, PTELL does nothing to limit how the burden shifts from commercial to residential properties. Property taxes on residential home owners will/can go up if the shift is significant, making PTELL insignificant for them.

Susan
3 months ago
Reply to  ted dabrowski

The exemptions to PTELL taxpayer protections render it meaningless.