My assessment went down and my taxes went up!  Why?

The amount of a property tax bill is determined by its equalized assessed value and the applicable tax rates.  Tax rates depend on the level of spending of local taxing districts.  Now here are some interesting twists and turns about assessments, tax rates and resulting taxes.

If assessed values increase it would not necessarily mean that tax bills will increase. If the taxing districts do not increase their levies, a general increase in assessed values means lower tax rates, and lower tax bills.  Let's make a simple illustration of four or five people splitting a dinner bill.

Four people (the tax base) have to pay a $100.00 dinner bill (the levy).  They each come up with $25.00.  Those twenty-five dollars represents the tax percentage of 25% for each person paying the bill.  

Now increase the tax base to five people and keep the bill at $100.00.  They each come up with $20.00 and the payment represents a decrease of the tax percentage to 20%.  So, if the levy remains relatively constant year to year (government spending) then the rates and the amount of the tax will depend mostly on the tax base being generally higher or lower.

On the other hand, if taxing districts increase their levies then tax bills generally will increase regardless of changes in assessed values.  Consider this simple illustration.

Same restaurant with four people but the dinner bill (levy) is $200.00.   Now each has to come up with $50.00.  Those fifty dollars still represents the same tax percentage of 25%.  The amount of tax increased because of the increase in the levy. 

Same restaurant with five people and the dinner bill (levy) is $200.00.   Now each has to come up with $40.00.  Those forty dollars represents a lower tax percentage of 20% but there is still an increase in the amount paid because the levy increased from $100.00 to $200.00. 

These relationships between the assessed values, the tax base, the levy and taxes are always related and are usually in a state of constant motion.  Market values increasing or decreasing affect the assessments; taxing districts requiring additional funding increase the tax regardless of the application of the rates or the increases or decreases in the assessment.   The fact that your assessment increased may not necessarily mean your taxes will increase and conversely if your assessment decreased your taxes could go higher.  It all depends on how big or how little of the governmental pie you are responsible to eat.

As a general rule we have found that 95% of all collar counties assessments have decreased between 10% and 20% over the past three years, yet due to increased government spending, taxes have gone up each year on most properties and this is due to tax rate increases greater than the assessment decreases.

Cook County's second installment of the 2012 real estate tax year is now on schedule to be sent to taxpayers of record July 1, 2013.  This bill will have the 2012 tax rates and a breakdown of the taxing district levies.  Pay particular attention to the differences in the tax rates and you will see if government spending has contributed to an increase in your taxes.

What can you do?

If you can envision a large graph which plots each property's assessment it would create a bell curve with half the property assessments right of the median and half the property assessments left of the median.  That right of the median represents higher assessments and those left of the median represent lower assessments.  Each property's assessment is multiplied by the same state equalization factor.  You want to be left of the median!  The owner with less of an equalized assessment has less of the pie to eat!

Always review your options for contesting your assessment.  Let us know if we can help.