Tag Archives: property taxes

Turmoil Grows Over Prepayment Of Property Taxes

A  matter of immediate importance to many property owners – prepayment of property taxes – is rapidly descending into chaos and unfairness.

https://i2.wp.com/www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/22/20171224_taxes.jpg

Can you prepay property taxes before the end of this year or not? You can for purposes of getting a deduction in 2017 under the new federal tax law, but the problem is whether your county will accept prepayment. It varies by county, which is obviously unfair, and reports are very confusing on what the rules are.

If you own in Cook County, try to prepay your 2017 taxes (due in two halves in 2018) and you’ll find that the county is only set up to allow you to pay 55% of the prior year’s tax. The place to do so is linked here.

But look here and you’ll see suburban McHenry County allows you to prepay a full year’s taxes, apparently, but you have to sign an agreement by Dec. 29. In fact, this article says you can prepay two years worth of taxes. (I don’t know how far out the federal tax code would allow deductibility, however.)

Nearby Kendall County, however, reportedly, is “taking a beating” from irate taxpayers because they can’t accept any prepayments!

Here’s a Daily Herald article discussing disparate rules in a few other suburban counties.

Compare that to Wisconsin. It was easy to prepay a full year based on one county I looked at — Walworth. Bills there came out a couple weeks ago for 2017 taxes due in two installments in 2018, but you could send in a full check anytime.

We’re not alone. “Residents can’t prepay property taxes in Montgomery County in Maryland, but they can in Fairfax and D.C,” according to a Washington Post article linked here. So, Montgomery County just announced a special session to to change its rules. In New Jersey, a state lawmaker is pushing the governor to expedite help to allow early prepayments.

This is important because many, many taxpayers will not be able to deduct property taxes under the new federal tax law after this year, or they will find that of no value because of the big increase in the standard deduction. Either way, prepaying to make them deductible this year will save many taxpayers thousands of dollars.

I’ve marked this article “story developing” because I expect a firestorm to develop over the unfairness of having different rules. Also, most of those rules appear not to be a matter of law but instead just an issue of what procedures various counties happen to have set up. I suspect there will be litigation over whether those different administrative procedures can properly be the basis for very different federal tax liabilities. Maybe Congress or state legislatures will act somehow to impose consistency in how much can be prepaid.

Source: ZeroHedge

Advertisements

Chicago Property Owners Get First Taste Of Record 12.8% Tax Hike

The second installment of Cook County property tax bills were due August 1. That includes the city of Chicago, where property owners got their first taste of a record increase the city council passed last year. Some property owners are facing double-digit increases.

After paying the highest property taxes ever levied in the city, many Chicago homeowners had the same complaint.

“For the amount of taxes that my neighbors and myself are paying, we’re not getting the proper services like other neighborhoods get,” West Side resident Steve Lucas said.

That’s because the taxes are not paying for added services. The Chicago portion of the property tax bill – which was increased by nearly 70 percent -will pay for police and firefighter pensions and school construction. Add that to what’s become an annual hike in the CPS operating budget levy.

“Increased every year. (Every year they’re increasing?) Yes, every year,” North Side resident David Chang said.

“(00:15:35)We are much better off today than we were five years ago,” said Alexandra Holt, Chicago budget director.

At Chicago’s City Club, Holt said Chicago’s looming $137 million deficit looks a lot better than $654 million projected at this time five years ago. Mayor Rahm Emanuel said the city had no choice but to raise money for pensions to spare the operating budget.

“There is a real financial cost and economic cost to the city if you don’t address the problem,” Emanuel said.

Former Gov. Pat Quinn has a petition drive underway to appoint a consumer advocate to help homeowners appeal their tax charges.

“The best way to do it is at the ballot box by gathering signatures on petitions like this one,” said former Illinois Gov. Pat Quinn.

The city has scheduled three more tax increases for police and fire pensions and still has not addressed a deficit in the retirement fund for city workers, not to mention a newly-authorized property tax hike to pay for teacher pensions.

“The city says they might have to go up again. Yes, and I might not be able to stay where I’m staying. I’ve been there 40 years and I don’t know if I can stay any longer,” South Chicago resident Doris Hood said.

The city council has approved a plan to rebate a few hundred dollars to the lowest-income homeowners if they apply. It should also be noted that the Chicago School Board is expected to approve a $250 million property tax increase for teacher pensions at its meeting later this month.

by Charles Thomas | ABC7Chicago


Chicago Property Taxes To Increase By 12.8 Percent

 The Cook County Clerk’s office released the 2015 property tax rates on Monday for the entire county. While the northern and southern suburbs of Cook County can expect a slight tax bill increase of 1.7 percent and 2.1 percent, respectively, Chicago’s property tax bills will rise by 12.8 percent.

According to the Clerk’s office, citizens of Chicago who paid an average tax bill of $3,220.32 in 2014, will pay an average of $3,633.19 on their 2015 bills, an increase of $412.87.

Cook County property taxes are paid in arrears, meaning the bill for 2015 is paid during 2016.

The Clerk’s office says that this substantial increase is due the city being reassessed in 2015, which resulted in a 9.3 percent increase in the equalized assessed value citywide. The equalized assessed value, or EAV, is a multiplier used in calculating property taxes to bring the total assessed value of all properties in Cook County to a level that is equal to 33.3 percent of the total market value of all the real estate in the county.

The Clerk’s office is quick to note that a majority of Chicago’s tax increase is due to the city increasing the pension portion of its levy by $318 million. As a result of the reassessment, the Clerk’s office says the city tax rate actually increased less than one percent compared to 2014.

Cook County is divided into three areas, Chicago, northern suburbs, and southern suburbs, which are reassessed every three years. The southern suburbs were reassessed in 2014. Chicago was reassessed in 2015. The northern suburbs will be reassessed in 2016.

Tax bills for Cook County property owners are due August 1, 2016.

Illinois Property Taxes Are Crushing Homeowners

Chicago area sees greatest population loss of any major U.S. city, region in 2015

Ten years ago, Bonita Hatchett built her dream home in Flossmoor. A lawyer by trade, she moved to the south Chicago suburb to join a diverse community that included black professionals like herself.

But Hatchett is now planning to leave it all behind. The culprit? Property taxes.

“You’re told all your life: Be educated, be successful, work hard and buy a house. But, we’re being abused for doing so,” Hatchett said. “Living in a town like Flossmoor, it’s just not worth it.”

She’s not alone.

Illinoisans pay among the highest property taxes in the nation, according to the nonpartisan Tax Foundation. Some Illinoisans’ property-tax bills are more than their mortgage payments. And the squeeze is getting worse.

Since 1990, the average property-tax bill in Illinois has grown more than three times faster than the state’s median household income, according to Illinois Policy Institute research.

While Hatchett estimates the value of her home has been slashed in half over the past decade, her property tax bill has only gone up. She paid more than $18,000 in property taxes last year — well over 5 percent of what she thinks her house is worth.

Hatchett plans to move to Indiana, where taxes on residential property are capped at 1 percent of the value.

Seventy miles from Hatchett’s home, in the northwest Chicago suburb of Crystal Lake, Cassandra Bajak thinks this coming Christmas will be her two children’s last in their home. Since she and her husband, an Army veteran, built the house in 2002, their property-tax bills have doubled — eclipsing their mortgage payments.

Her family now is choosing between a move to a southern state or downsizing in their community.

“We’re being taxed out of our home,” Mrs. Bajak said. “The only reason we would ever leave our home or this state is property taxes, and that’s what’s going to happen.”

In McHenry County, where the Bajaks reside, property taxes eat up nearly 8 percent of the median household income. What’s worse, Illinoisans aren’t getting much bang for their tax bucks.

Property taxes at the municipal level have not been going to fund spotless roads or other public works. Instead, they’re mostly funding out-of-control pension costs.

Just take a look at Springfield, where 98 percent of the city’s 2014 property tax levy went to pensions. And where, from 2000 to 2014, members of the typical household have seen their property-tax bill grow more than twice as fast as their income.

Despite that, city-worker retirements are still in jeopardy.

While taxpayers have more than doubled their contributions to the local police and firefighter pension systems over the past decade, Springfield’s police pension fund has a mere 53 cents in the bank for every dollar it needs to pay out future benefits; for firefighter pensions, only 45 cents.

Forcing homeowners to keep shoveling more property tax dollars into broken pension systems has become a morally bankrupt solution to the problem.

In Springfield, for example, residents already contribute four times more money into police, fire and municipal employee pensions than do the employees.

The problem is that, in Illinois, state politicians mandate pension benefits for local government workers, with little regard to fairness for local taxpayers.

Many communities would prefer not to pay the high cost of workers enjoying early retirement ages, health insurance benefits normal residents could never afford, and annual 3 percent cost-of-living adjustments that private-sector workers could only dream of.

So how can the state protect homeowners?

Forcing local governments to begin to live within their means through a property-tax freeze, as has been proposed by Gov. Bruce Rauner, is necessary. But solving the root cause of the property-tax problem will require further reform, such as moving all new government workers from defined-benefit to self-managed retirement plans, transferring the power to negotiate pension benefits down to local leaders, and encouraging aggressive consolidation and resource-sharing across units of local government. For some communities, the only option to undo decades of mismanagement will be bankruptcy.

Until sincere efforts are made at reform, Illinoisans will continue to live in fear: taxpayers of being squeezed out of their homes, and government workers of pension payments that may never come.

by Austin Berg | Chicago Tribune

Chicago area sees greatest population loss of any major U.S. city, region in 2015

After years of financial woes, Lindsey Yates and her husband had to at last address the nagging question: Should they stay or should they go?

The young couple’s continued residency in Chicago was threatened by new obstacles every few months. First came the rising property taxes, then the stress of finding a decent school for their 2-year-old son in a neighborhood they could afford.

Three weeks ago, Yates and her family hit the road, leaving the South Loop and successful careers in the rearview mirror as they headed toward their new house in a Denver suburb.

“The thing that boggles my mind: How is it that a dentist and a business professional and their one young son” can’t make it work financially? Yates asked from the road, at a pit stop in Nebraska, where her in-laws are living. “If we can’t make it work, who can?” she asked.

http://www.trbimg.com/img-56f463aa/turbine/ct-population-changes-chart-20160324-001/751/751x422

By almost every metric, Illinois’ population is sharply declining, largely because residents are fleeing the state. The Tribune surveyed dozens of former residents who’ve left within the last five years, and each offered their own list of reasons for doing so. Common reasons include high taxes, the state budget stalemate, crime, the unemployment rate and the weather. Census data released Thursday suggest the root of the problem is in the Chicago metropolitan area, which in 2015 saw its first population decline since at least 1990.

Chicago’s metropolitan statistical area, defined by the U.S. Census Bureau, includes the city and suburbs and extends into Wisconsin and Indiana.

The Chicago area lost an estimated 6,263 residents in 2015 — the greatest loss of any metropolitan area in the country. That puts the region’s population at 9.5 million.

While the numbers fell overall, there were some bright spots in the Chicago area: Will, Kane, McHenry and Kendall counties saw growth spurts, according to census data.

A crumbling, dangerous South Side creates exodus of black Chicagoans

The Chicago region’s decline extended to the state. In fact, Illinois was one of just seven states to see a population dip in 2015, and had the second-greatest decline rate last year after West Virginia, census data show. While the state’s population dropped by 7,391 people in 2014, the number more than tripled in 2015, to 22,194.

The plunge is mainly a result of the large number of residents leaving the state last year — about 105,200 in all — which couldn’t be offset by new residents and births, according to census data. The last year Illinois saw its population plunge was 1988.

The potential fallout is both political and financial. Federal and state government dollars are often distributed to local government agencies based on population; so the population loss creates long-term budget concerns. Communities pouring millions into new roads and schools, for example, based on rosy projections of future growth are left with fewer taxpayers to cover the cost.

http://www.trbimg.com/img-56f5833f/turbine/ct-illinois-population-decline-photos-20160324-001/1200/1200x675

Sights set on sun

Illinois has a long-standing pattern of losing residents to other states, but the loss has generally been offset by births and migration from other countries. Residents are mostly flocking to Sun Belt states — those with the country’s warmest climates, such as Nevada, Arizona and Florida.

During the years after the economic recession of the mid-2000s, migration to those states slowed, but it’s heated up again as states in the South and West have sunnier job opportunities and affordable housing.

“The old Snow Belt-to-Sun Belt movement is picking back up again, and movement south and west is fueling up,” said William Frey, a demographer with the Brookings Institution who analyzes census data.

Richard Morton, an Illinois resident of 62 years, is building a house in Panama City Beach, Fla., and plans to move into it in March 2017.

“We’ll say ‘hasta la vista, Illinois.’ I say that rather humorously, but I’m really rather sad about it,” he said. “My mother was born in Illinois. My grandparents lived their entire lives in Downers Grove.”

The clear draw for Morton is Florida’s weather but also what he calls an “attractive economy.”

“I used to enjoy Illinois and the area,” he said. “But everyday there’s a reason to not want to stay here. Between (Gov. Bruce) Rauner and (House Speaker Michael) Madigan, how will the state ever fix its pension problem? To me it seems unfixable, and I don’t want to have to pay for it.”

Texas attracts the greatest number of Illinois residents, followed by Florida, Indiana, California and Arizona, according to 2013 IRS migration data. Weather isn’t the only reason people are leaving the state.

More Illinois residents move to other Midwestern states than the number of Midwesterners moving to Illinois, said Michael Lucci, vice president of policy at the right-leaning Illinois Policy Institute. Job and business creation are simply stronger in neighboring states, he said.

“We talk opportunity all the time. If you’re moving to California, you might be a tech worker, or you might be someone who likes sunshine,” he said. “But when you see Illinois losing people to every Midwestern state, you know it’s not weather. People are moving for economic reasons.”

Through the 1990s and 2000s, Illinois saw what demographers consider normal rates of exodus for the state, about 50,000 to 70,000 more residents moving away from the state than moving in. But in 2015, the number spiked to about 95,000, and in 2015 it reached more than 100,000 people, according to census data.

Several moving companies that examine industry trends found high numbers of Illinoisans moving out of state. Allied Van Lines this year ranked Illinois No. 2 on its list of states with greatest outbound moves with 1,240, said spokeswoman Violette Sieczka. The numbers are limited to the movement of entire households.

The loss of residents over the last 20 years translates to about $50 billion in lost taxable income, and about $8 billion each year in lost state and local tax revenues, Lucci said.

“Frankly, we have this state budget problem, and it would be a lot less of a problem if we had all these people,” he said. “Growth makes problems better, out-migration makes problems worse.”

Losing faith in city

The main factors in Chicago’s population dip are diminished immigration, the aging of the Mexican immigrant population that bolstered the city throughout the 1990s as well as an exodus of African-Americans, experts say.

More than any other city, Chicago has depended on Mexican immigrants to balance the sluggish growth of its native-born population, said Rob Paral, a Chicago-based demographer who advises nonprofits and community groups. During the 1990s, immigration accounted for most of Chicago’s population growth. The number of Mexican immigrants rose by 117,000 in Chicago that decade, according to data gathered by Paral’s firm, Rob Paral and Associates.

After 2007, falling Mexican-born populations became a trend across the country’s major metropolitan areas. But most of those cities were able to make up for the loss with the growth of their native populations, Paral said. Chicago couldn’t.

Some experts also attribute the decline to the city’s African-American population, in part because of historically black communities hit hard by the foreclosure crisis, making houses cheap and easy to buy for Hispanics and whites who were willing to move for a bargain.

The 2010 census reported a 17 percent drop in the city’s black population over the previous decade. That number declined another an additional 4 percent through 2014, to 852,756.

“White people have left the state for years,” Paral said. “But African-Americans? That’s the one-two punch.”

Chicago residents leaving the state have cited the Chicago Public Schools’ financial crisis and the city’s red light camera controversy as motivating factors. The greatest concern, however, seems to be safety. Despite being the nation’s third most populous city, Chicago outpaces New York City and Los Angeles in the number of homicides and shootings, though it fares better than some smaller cities on a per capita comparison.

Melissa Koski, who moved to Arizona in 2008, said she left after being the victim of two crimes. One involved a break-in at her University Village neighborhood apartment while she slept, and the second involved being robbed at gunpoint near Grand and Milwaukee avenues with her mother.

“He got a whopping $40, but I still remember his smell and can feel his sweaty body wrapped around mine, with what felt like a gun pressed to my back,” she said.

Pat and Anna van Slee, longtime residents of the Uptown neighborhood, spent Thursday morning packing their house, preparing for their move to Thousand Oaks, Calif.

Their last apartment was in a six-flat that saw a series of crimes in and around the building in recent years. In one instance, a neighbor was mugged outside the complex; in another, a homeless man seeking shelter in the complex’s basement crawled through the window of the van Slees’ downstairs neighbor, Anna van Slee said.

“We’ve always lived in developing neighborhoods, but when you have a baby it makes you look at things differently,” Anna van Slee said, referring to her son, 4-month-old Orion. While the couple is moving primarily because of job opportunities, they’re glad to not have to enroll Orion in a CPS school, either, they said.

“Oddly, this was a safer neighborhood when it was rougher. It didn’t have some of the tension there is now, when million-dollar condos are going up next to subsidized housing,” she said.

Stemming the tide

There are things that can be done in coming years to mitigate the further exodus of residents from the state, said Lucci, of the Illinois Policy Institute. He recommends refocusing on manufacturing jobs in the state and curbing property taxes.

“We’re never gonna have Colorado’s mountains or California’s beaches,” he said. “But we have historically had an attractive business and job market. The problem is that we don’t have that anymore.”

Indeed, the employment rate is an issue: Illinois this year is tied with West Virginia for the 46th worst employment rate of all states, at 6.3 percent, according to Bureau of Labor Statistics.

“People are leaving Illinois because we rank near the bottom in job growth in the Midwest and have among the highest property taxes in America,” Catherine Kelly, a spokeswoman for Rauner, wrote in an emailed statement. “We have to make structural changes in Illinois to ensure talented people — many of whom run businesses — stay in Illinois to help grow the economy and improve our state’s future.”

In response to the decline in the region’s census numbers, Mayor Rahm Emanuel’s office issued a statement, saying the mayor was “working hard to build the Chicago economy of tomorrow by investing in a diverse economy and highly educated workforce that will continue to bring jobs and people to Chicago.”

It’s important that communities engage in careful discussion about cutbacks, and begin planning for smaller populations and smaller economic growth, said Eric Zeemering, a professor at Northern Illinois University’s School of Public and Global Affairs. But those discussions tend to be difficult and unpopular, he said.

“When politicians are focused on their next elections, it’s hard to have conversations about cutbacks and the realistic budgetary future,” Zeemering said.

In the meantime, he expects local leaders will make efforts to promote and advertise their towns as great places to live. The goal is that these communities will keep their residents despite the state’s problems.

“At the end of the day, some people are happy to live in snowy weather,” Zeemering said. “We don’t want to be a state people view in a negative light.”

by Marwa Eltagouri | Chicago Tribune