Ever wonder why real estate taxes can increase from year to year when your assessment stays the same?
The property tax is the largest single tax in Illinois, and is a major source of tax revenue for local government taxing districts. Property tax is a tax that is based on a property's value.
An assessment is the property value that officially is entered in the county assessment books (often called "the tax base"). This value is used to determine what portion of the total tax burden each property owner will bear.
In the budgeting process, taxing districts project expenditures based on the revenues that are expected from all sources and the total amount needed to operate (often called "the levy").
The process of billing requires county clerks to calculate a tax rate. The tax rate is a number that, when multiplied against your assessment determines the real estate tax.
Tax Rate = All the money government needs (the Levy)/
The county's total assessments (tax base)
If government wants the same money to operate each year and the county's tax base is lowered, the tax rate will increase to cover the cost of government spending.
- A tax base of 500,000,000 and a levy of $25,000,000 would create a 5% rate.
- A tax base of 400,000,000 and a levy $25,000,000 would create a 6% rate.
- A tax base of 300,000,000 and a levy of $25,000,000 would create an 8% rate.
In our illustration above, if your assessment stayed at 100,000 but the county's tax base declined, your real estate tax would increase.
- Your assessment @ 100,000 with a 5% rate would produce a tax of $5,000
- Your assessment @ 100,000 with a 6% rate would produce a tax of $6,250
- Your assessment @ 100,000 with a 8% rate would produce a tax of $8,333
What to do?
While you cannot effectively fight the county's total assessment or government spending alone, you can appeal to reduce your own assessment and real estate taxes can be less. (50,000 assessments with a 5% rate = $2,500 in tax...)
Let us help you try...