Illinois Homestead Act - Property Tax Section in Lease - Champaign

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Illinois Homestead Act - Property Tax Section in Lease - Champaign

Anthony Hornbeck
Engineer · Savoy, IL · Member since 2013 · 92 posts · 12 votes

Hey BP-ers,

I tend to have tenants express concerns over the property Tax portion of my lease. 

Does anyone in Illinois want to take a stab at explaining this section in clear language? 

Is there a better way to word this section of the lease?
What do you guys have in your leases pertaining to the Illinois Homestead Act in order to take full advantage of tax exemptions?
Chopped from my lease:
"REAL ESTATE TAXES: (Single Family Homes only)

Tenant shall be liable for the payment of real estate taxes with respect to the residence. The permanent real estate number (PIN) for this property is XX-XX-XX-XXX-XXX . Tenant shall be deemed to satisfy the liability for such real estate taxes through the monthly rent payments set forth. Tenant acknowledges that Owner or his representative, has explained terms of Illinois Homestead Act with regard to real estate taxes and Tenant understands said taxes are being paid by and through the monthly rental fees alone, and Tenant does not pay said real estate taxes other than through monthly rent."

Thanks!

Champaign. Urbana, Decatur, Peoria area guys, if you have a sec, I'd love to hear from you.

@Steven Hamilton II - Perhaps you'd have some input.

(Can somebody tag him for me? - Thanks!)

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  • Rob Anderson
    Real Estate Investor · Champaign, IL · Member since 2013 · 114 posts · 55 votes
    11y

    Hey @Anthony Hornbeck 

    First off let me say I do use this as well but with the understanding that is a kind of a backdoor tax exemption and would most likely not hold up if you were questioned on it. . . Here is why. "This annual exemption is available for residential property that is occupied as the principal dwelling place of the owner, or a lessee; with a legal or equitable interest in the property; with a single-family residence; and who is liable for the payment of the property taxes on the leased property"  To break it down more. If you would really want this exemption to hold up if questioned your tenant would either have to be on the deed or have equitable interest in the property such as being a beneficiary of the property through a trust or something similar. Im sure neither of which will ever be the case. 

    With that in mind, here is how I have it written.

    Resident shall be liable for the payment of real estate taxes with respect to the residence, in accordance with the terms and conditions of Section 200/15-175 of Chapter 35 Illinois Compiled Statutes, as amended (35 ILCS 200/15-175,(1994). The permanent real estate index number for the residence is available via the Champaign Assessor's Office for the property address at ...

    Hope this helps! oh we still need to grab a drink sometime. I'll be in touch

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  • Anthony Hornbeck
    OP
    Engineer · Savoy, IL · Member since 2013 · 92 posts · 12 votes
    11y

    @Rob Anderson 


    Thanks man. So basically you've hit on my number one concern. If I'm going to claim an exemption, I'm only planning to do so if it's legitimate. I've been reading back and forth on whether or not it IS, and the term "legal or equitable interest," is what has me most concerned. I've read a lot of conflicting info, and I'm trying to sift through and figure out what is legitimate. I mean I will end up having an accountant run my taxes, but I still need to be informed. I know a lot of landlords are claiming the exemption, but I didn't find what the courts set as a precedent. I had been operating my original lease under the assumption that if all the larger operations & property managers are doing this publicly, it must be ok. I prefer not to assume anything really.

    Thanks again.

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  • Andrew Henson
    Rantoul, IL · Member since 2016 · 18 posts · 8 votes
    10y
    Does this tax break apply to a duplex as well?
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  • Shao Ya Xu
    Rental Property Investor · Champaign, IL · Member since 2016 · 10 posts · 1 vote
    3y

    Hi, I was recently advised by my lawyer that I can include this Real Estate Tax Liability section in my lease to get the Homestead Exemption for my rental properties in Champaign/Urbana. I am on the fence of should I include it in my lease or not. Do you guys have success claiming the exemption? What do you need to bring to the City to file for the exemption? Just the signed lease or do you need some other form(s) signed by the tenant as well? Also, how do you explain clearly to the tenant to ease their concern? 

    Thank you in advance!

    Below are the section my lawyer advised me to include in my lease:

      1. REAL ESTATE TAX LIABILITY. Notwithstanding anything herein to the contrary, Tenant shall be liable for the payment of real estate taxes with respect to the residence in accordance with the terms and conditions of Section 15-175 of the Property Tax Code (35 ILCS 200/15-175). The permanent real estate index number for the premises is (insert number), and, according to the most recent property tax bill, the current amount of real estate taxes associated with the premises is (insert amount) per year. The parties agree that the monthly rent set forth above shall be increased or decreased pro rata (effective January 1 of each calendar year) to reflect any increase or decrease in real estate taxes. Tenant shall be deemed to be satisfying Tenant's liability for the above mentioned real estate taxes with the monthly rent payments as set forth above (or increased or decreased as set forth herein).
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