Chicago Property taxes on new purchase

[John Huynh]

Hi everyone,

I am looking to purchase a multi-unit property in Chicago and am currently analyzing properties. Since the home prices have increased significantly in Chicago, I want to understand how to estimate my future property taxes taking into account the price that I purchase my property for. 

I want to understand how the property taxes are calculated in Chicago. I see "property value" and "assessment level" are denoted when looking at the tax bills of properties at https://www.cookcountytreasure... . When looking at the tax bills, I see the "Property value" field in the tax bill is very different than the asking price on Redfin. I am seeing properties on Redfin with an asking price of 1.05 million dollars, but the 2020 Property value is showing as 540k. Can someone help me understand how the "Property value" field is calculated in the Cook County Property tax bill? I understand that people can ask for more than what their property is worth, but it was sold for 850k in 2005 so why wasn't a value around that price used for the 2020 "property value" field?

 If I purchase a property, will my new "property value" be the price that I bought it at?

[John Warren]

@John Huynh this is a tough one for sure. In Cook County, the assessor assesses all of the properties every three years, and they do 1/3 of the county every year more or less. You should definitely take a look at what would happen if they chase the sales price as this can actually happen. The thing to remember is that your assessed value is typically not going to be looked at by the assessor for another year or two depending on where you are in the cycle. 

The other challenging thing is that the tax rate can change. The city has a lower tax rate than most of the suburbs, but the tax rate can still fluctuate. During the crash many years ago, the tax rates went up as assessed values went down (you didn't think taxes would go down did you?!). The county and local municipalities need a certain amount of money every year, and this amount goes up a bit each year. This is why the tax rate can go up or down. If assessed values increase a lot, they can go down to compensate so folks aren't overtaxed. If assessed values drop (or other things like commercial properties leave) then the tax rate can go up to compensate. 

Long story short, just figure out ballpark what your worst case could be and make sure you are still good if that happens.