Common Property Tax Exemption Myths
Due to some common myths and misperceptions about property tax exceptions, many homeowners don’t always take advantage of property tax exemptions available to them on their personal residence. Worse, they may do so incorrectly, resulting in penalties from the county assessor. Every homeowner is responsible for knowing the property tax exemptions available to them and how they can help save them money on a yearly basis. Effective application of property tax exemptions to one’s property taxes can help reduce them considerably or even eliminate them altogether. Here are some of the common misperceptions about property tax exemptions:
Myth #1: Homeowners can apply to receive a homeowners exemption on multiple properties
A homeowner is only entitled to receive a homeowner’s exemption on one property, which he or she claims to be his or her personal residence.
Myth #2: Seller’s exemptions will transfer to the buyer after the purchase.
Once a property is sold, all exemptions will be removed from the property, and they will not be available to the buyer in the next year when they need to pay property taxes. The only exemption that may remain is the homeowner’s exemption.
Myth #3: Homeowners need to re-apply for the homeowner’s exemption every year.
A homeowner does not need to re-apply for the homeowner’s exemption every year. This may vary from county to county and state to state, but at least in Cook, Lake, and other collar counties of Illinois, homeowners don’t need to re-apply for this exemption every year while they are living at a property
Myth #4: Homeowners who forgot to apply for their exemptions when they bought a property can no longer apply for them.
In most counties, a homeowner can always apply for and receive their exemptions retroactively for the past three years if they were entitled to such exemptions during that time.
Myth #5: Property tax exemptions will not eliminate property taxes completely.
In reality, this varies from county to county and state to state. In Cook County and most of the collar counties, if a veteran with a disability from their service has a level of disability deemed greater than 71%, the County Assessor will refund all of their property taxes for each of the applicable years.
Myth #6: Remodeling a property will increase its taxes
Most counties offer a homeowner improvement exemption to homeowners. In Cook County, this exemption will forgive taxes on the first $75,000 of improved market value for a property due to remodeling, and only tax anything over $75,000. As such, if remodeling improved the market value of the property by $100,000, the county will forgive the first $75,000 and increase the property taxes based on a $25,000 market value increase over the next 3 years.
Myth #7: Homeowners do not need to pay the full amount of taxes listed on the tax bill if the homeowner’s exemption is not listed on it
A homeowner still needs to pay the full amount listed on their property tax bill. After the payment is made, they then need to file a certificate of error application with the county to get their homeowner’s exemption refunded to them.
Myth #8: Homeowners can not apply for a homeowner’s exemption retroactively if they do not have a copy of their old driver’s license
Most counties allow for other forms of identification to prove that a homeowner lived at a property when they were entitled to receive a homeowner’s exemption within the last three years.
Myth #9: Investors are entitled to apply for and receive property tax exemptions like everyone else.
Investors and homeowners who don’t use a property as their primary residence are not entitled to apply for or receive any property tax exemptions.
Property tax exemptions are important for all homeowners and can save them on property taxes before, at, or after the closing. Receiving these exemptions by greatly reduces one’s cost of homeownership on a yearly basis. Every homeowner should consult their local county assessor’s office or property tax professional for more information on property tax exemptions.