Understanding Property Assessment Levels In Cook County

The Cook County Assessor's Office is responsible for determining the market value of your property and calculating your property taxes. The assessor's estimate of your home's market value is based on two things: your home's characteristics and patterns between how other homes' characteristics affected their sale values. The assessed value of your property is then determined by taking 10% of its fair market value for residential properties and 25% for commercial properties. This is then multiplied by the state equalization factor to reach the equalized assessed value (EAV). After any exemptions are deducted from the EAV, your local tax rate and levies are applied to compute your property taxes.

Calculating the fair market value of a property

Fair market value (FMV) is the price a property would sell for on the open market. It is the price agreed on between a willing and informed buyer and seller, acting in their own interests, without any pressure, and with ample time to make the decision. FMV is used in legal settings, taxation, and the real estate market.

There is no standard formula for calculating FMV. It is often calculated by taking the average value of at least three comparable homes (or "comps") that have sold recently. An appraiser will examine these homes and factor in positives or negatives based on certain features. For example, if the home in question is larger than the others, this could be considered a positive. This process helps to paint a more accurate picture of the property's value.

Other ways to calculate FMV include:

• The cost approach: Considering the previous sale price of the lot and the cost of construction, minus depreciation.
• The income capitalization approach: Based on the income generated from the property.
• Price per square foot: Dividing the sale price of similar properties in the area by their size to get a rate, then applying this rate to the property in question.
• Comparative market analysis: Working with a real estate agent to compile a list of similar properties and their sale prices to estimate the FMV.
• Professional appraisal: An impartial opinion of value from a licensed appraiser.

Factors Influencing FMV

• Location: Desirable locations near amenities and low-crime areas command higher values.
• Condition: Well-maintained homes with modern systems and finishes hold their value better.
• Market conditions: In a seller's market, values are higher due to high demand, and vice versa.
• Recent comparable sales: Sales prices of similar nearby homes adjusted for differences reveal what buyers are currently paying.
• Unique features and upgrades: Remodels, custom touches, pools, and high-end appliances can increase FMV.
• Lot size and usability: Larger lots with more functional space and privacy are valued higher.

Cook County, Illinois

In Cook County, the assessed value of residential property is calculated as 10% of its fair market value, as determined by the Cook County Assessor's Office. This is then used to calculate property taxes.

Assessing the property's value

The Cook County Assessor's Office determines the value of your house by calculating its fair market value. This is done by taking into account the recent sales of properties in your neighbourhood with similar characteristics to your home, such as age, square footage, and type of construction. Statistical modelling is used to determine how these characteristics affect sale values.

The Assessor's Office uses a Computer Assisted Mass Appraisal (CAMA) system and skilled residential analysts to estimate property values. The CAMA system detects patterns in the data to estimate how each characteristic may have influenced sale values. For example, each additional square foot for a building might on average add $50 in value, while each additional year in age might subtract $50.

Once the best-performing statistical model is selected, it is used to estimate the values of all individual homes in a geographic area, whether or not they have been recently sold. The CCAO's analysts then review and correct individual property assessments as needed. After this process is complete, the CCAO mails an assessment notice to the property owner, which includes the home's characteristics and initial estimated value.

The assessed value of a residential property in Cook County is equal to 10% of its fair market value. For commercial properties, the assessed value is typically 25% of the fair market value.

Applying the State Equalization Factor

The State Equalization Factor, also known as the "State Equalizer", is a mathematical multiplier that ensures uniformity in property assessments across Illinois. The Illinois Department of Revenue is required by law to calculate this factor, which changes annually. The state assigns an equalization factor to bring assessments to the legally mandated level of 33 1/3% of the market value of the property.

In Cook County, residential property is assessed at 10% of its market value, per a Cook County ordinance. This means that the state equalization factor for the county is used to bring the assessed value up to the mandated level. For example, the 2021 state equalizer factor for Cook County was 3.0027, and the 2020 factor was 3.2234.

The state equalization factor does not impact the amount of property tax bills. It does, however, influence how other state funds are divided. The equalization factor ensures that Cook County receives its fair share of state programs and revenue streams relative to other counties. Without equalization, other counties would receive multiple times more state funding per assessed dollar.

The state equalization factor is applied to the assessed value of a property, creating the Equalized Assessed Value (EAV). Any exemptions earned by the property are then subtracted from the EAV. The tax rate is then applied to the tax levies for the community, and the total is the amount of property taxes owed.

Deducting any exemptions

Once you have the Equalized Assessed Value (EAV) of your property, you can deduct any exemptions. Exemptions are based on the type of property and who owns it. For example, in Cook County, Illinois, the General Homestead Exemption is available to those living in their principal residence. This exemption is equal to a $10,000 reduction in assessed value. There is also a Senior Citizens Homestead Exemption for homeowners aged 65 or over, which is a $5,000 reduction in assessed value, or $8,000 in Cook County.

There are also exemptions for disabled veterans, which can be a partial or total exemption depending on the disability rating issued by the U.S. Veterans Administration. Surviving spouses of disabled veterans may also qualify for an exemption.

In addition to these, there are a number of other exemptions that may apply, depending on your location and circumstances. These could include exemptions for first responders, charitable organizations, and businesses.

To claim an exemption, you will need to file an application with the relevant authority, usually the appraisal district or county assessor's office. The deadline for filing an exemption application is typically before May 1.

It's important to note that not all property tax payments are deductible. For example, you cannot deduct taxes paid on a property you don't own, commercial or rental property, taxes paid during the transfer of a sale, or costs for home renovations and local improvements.

When it comes to federal income taxes in the U.S., you may be able to take an itemized deduction for certain state, local, and foreign taxes you have paid. This includes state and local real property taxes, which are generally any state or local taxes on real property levied for the general public welfare. However, there are certain taxes and fees that you cannot deduct on your federal tax return, such as federal income taxes, social security taxes, transfer taxes, and homeowner's association fees.

Calculating the final property tax bill

The final property tax bill is calculated by the Cook County Treasurer using a formula that takes into account various factors such as the market value of the property, tax rates, and exemptions. Here is a step-by-step guide on how the final property tax bill is calculated:

• Determining Market Value: The Cook County Assessor's Office calculates the fair market value of your property based on recent sales of similar properties in your neighbourhood. They consider factors such as square footage, age, and location.
• Assessed Value: For residential properties in Cook County, the assessed value is equal to 10% of the fair market value. This is the taxable amount of the property as per the county ordinance.
• State Equalization Factor: The state equalization factor, also known as the "State Equalizer", is then applied to the assessed value. This factor ensures uniform property assessment throughout the state and brings the assessed values to the legally mandated level. It is determined by comparing the actual selling price of properties to the assessed value over a three-year period.
• Equalized Assessed Value (EAV): After applying the state equalization factor, the equalized assessed value (EAV) for the property is obtained.
• Exemptions: Any qualified property tax exemptions are then deducted from the EAV. These exemptions can include things like the General Homestead Exemption, Senior Citizens Homestead Exemption, or other incentives offered by the county.
• Tax Rate and Levies: The local tax rate and levies are then applied to the adjusted EAV to compute the dollar amount of your property taxes. The tax rate is determined by local taxing bodies and can vary depending on the location of the property.
• Billing and Payment: The final property tax bill is typically mailed out twice a year by the Cook County Treasurer. The first installment is usually due in March, and the second installment is due in August. The second installment reflects any changes in tax rates, levies, assessments, and exemptions.

It is important to note that property taxes in Illinois are quite high, with the state having the second-highest property taxes in the country. The average effective property tax rate in Cook County is 2.19%, which is higher than the state average of 2.07%. Property taxes in Illinois support various local services and projects, including city and county governments, school districts, fire protection districts, and more.

Frequently asked questions