What is a homeowner’s exemption and why do I need it?
If you’ve been shopping for a home for any amount of time, you’ve probably seen this in the tax info and wondered why some properties have a homeowner’s exemption and why some don’t.
I have a short answer if you just want to know how much you’ll save on your taxes. Here it is: If the property is your primary residence (not an investment, or secondary residence), you can apply for the homeowner’s exemption and save about $450-$480 on your taxes after next year’s taxes come out. (Note: this is for homeowners in Cook County ONLY, if you live elsewhere, your exemption will be calculated differently)
Keep reading if you love calculations and sifting through lots of obscure government lingo (but you don’t have to call the Cook Property Tax office, which we did for you, and I don’t recommend it unless you really have nothing better to do.)
Here is the definition of a homeowner’s exemption: “it provides tax relief by reducing the equalized assessed valuation of an eligible residence.” And the obscure lingo begins.
Amount of Exemption = $7000 X the township tax rate
Townships are divisions within a county and Cook County has 28 townships altogether.
Now the tricky thing is there is no table of township tax rates. To find out which township your property is in, you have to input the property PIN here: http://www.cookcountypropertyinfo.com/ and the tax rate will be in the middle of the page on the right hand side. That number will be a percentage, around 6.8%. The Cook County Tax office representative we talked to said most tax rates are “6 point something” so all homeowners exemptions will equal somewhere in the $400s.
If your tax rate is 6.8%, to find your exemption amount, take $7000 and multiply it by 0.068 and you will end up with $476.
Here’s a bonus for those of you who want to calculate your own property tax amounts:
Property Tax (without Homeowner’s exemption) = Estimated Market Value X 0.10 (Cook County assessment rate) X 0.027253 (equalization factor) X ~0.068 (township tax rate)
The Estimated Market Value is the estimated value of the property that is calculated by a company called CoreLogic, NOT to be used in lieu of an appraisal, but IS used for property tax purposes. To find it, enter the property PIN at http://www.cookcountyassessor.com/ and it will be in the middle of the page, right under “Property Characteristics.”
The current Cook County assessment rate is 0.10.
The Equalization Factor for Cook County varies every year, and changes around June: currently 2.7253%
The township tax rate is determined by looking up a specific property’s PIN, as described above.
So there you have it! Congratulations for making it to the end! The conclusion of the matter is, if you are eligible for a homeowner’s exemption, you will save around $450-$480 each year on your property taxes if you live in Cook County.
If you would like to purchase or sell a home, we are here to help. We are a real estate team located in downtown Chicago and would love to help with your real estate needs. Give us a call at (617)285-2966 or email at firstname.lastname@example.org to get started!