26-Jan-21 – On November 24, 2020, the Cook County Board of Commissioners, on a motion by Commissioner John P. Daley, voted to give Chicago and Cook County property owners a 60-day extension on payment of the 2020 real estate taxes because of the pandemic.

The extension, titled the COVID-19 Tax Relief Ordinance, pushed back the deadline for paying the first installment of taxes to May 3, 2021, from March 2, 2021. The second installment of taxes will be due on October 1 instead of August 2.

The action should provide relief for thousands of homeowners who pay their real estate taxes directly. The extension means that no late-payment interest penalties will be charged on billions of dollars of tax bills.

However, don’t expect a tax payment break if your bungalow or two-flat is burdened by a mortgage. Most tax payments are paid online by mortgage holders from non-interest-bearing property tax escrow accounts held by banks and mortgage companies.

“Banks and mortgage companies generally will not recognize the 60-day pandemic tax payment extension and will dutifully pay the taxes to Cook County on March 2 and August 2 this year,” predicted Michael Griffin (left), a Chicago real estate tax appeal attorney.

Illinois lenders are not required to pay interest on tax escrow accounts. However, lenders in 15 states – including California, Iowa, Minnesota, New York, and Wisconsin – pay interest escrow accounts. In Illinois, borrowers have an option at closing on a property to open an interest-bearing account to be used for payment of real estate taxes. When a mortgage is paid down to 65 percent of its original amount – and if the loan is not in default – the lender must notify the borrower that he or she may terminate the escrow account and pay the taxes directly.

Cook County Assessor Fritz Kaegi recently gave property owners, including beleaguered homeowners in Chicago’s wealthy neighborhoods from River North and Old Town to Lincoln Park and Lake View, a glimmer of hope – lower tax assessments.

Kaegi sent “COVID-19 assessment adjustment letters” to thousands of Chicago property owners, noting that the pandemic has caused a “significant economic downturn and lower property values,” depending on the property’s type and location. Unfortunately, these temporary reductions were only for 2020 since all of Chicago will be reassessed in 2021.

In Chicago, the COVID-19 assessment value reductions average ten percent. They range from a low of 7.5 percent in Lake View, Lincoln Park, and Uptown, and nearly 8 percent in Bronzeville, Loop, Old Town, River North, and South Loop. The reductions are about 9.5 percent in Rogers Park and West Ridge, and range as high as 12 percent on Chicago’s South Side.

The assessor also reduced the assessments on two-flat to four-flat apartment buildings in Cook County ranging from 9.3 to 15.4 percent.

Examples of COVID-19 assessment reductions in Old Town include:

• The owner of a brick Victorian four-flat received a $13,083 reduction in assessed value to $117,745 from $130,828. He paid a 2019 real estate tax bill of $26,285 on the property. The first installment 2020 tax bill, which represents 55 percent of last year’s bill, is $14,456.

Despite the COVID-19 assessment reduction, the lender, anticipating higher taxes in 2020, increased the owner’s monthly tax escrow payment by $515 to $2,852 from $2,337 for January through April of 2020.

• The owner of a brick Victorian six-flat received a $11,145 reduction in assessed value to $100,298 from $111,443. The owner paid a 2019 real estate tax bill of $21,701 on the property. The first installment 2020 tax bill, representing 55 percent of last year’s bill, is $11,935.

Mayor Lori Lightfoot’s 2021 pandemic budget will include a $93.9 million property tax hike as part of a $1.6 billion real estate tax levy. About $34 million of the real estate tax hike is linked to a future rise in the consumer price index.

The new budget ordinance requires property owners in the future to pay either an annual property tax increase of five percent or an increase based on the consumer price index, whichever is less. The Lightfoot administration says the increases will be approved annually by the Chicago City Council.

Lightfoot has argued the “modest” 1.3 percent real estate tax increase to homeowners is necessary. A bungalow owner with a property valued at $250,000 will see a tax bill increase of $56. But more expensive homes could see increases of hundreds of dollars. Photo by Jim Roberts.

“Every homeowner should review their last tax bill to see if they received the proper exemptions and contact the assessor if the exemptions are incorrect,” Griffin advised.

Real estate taxes for 2020 are expected to rise when the second installment of the bill comes due on October 1, 2021. However, predicting a hefty property tax increase this year really centers on two wild cards – the tax rate and the state equalization factor, which can’t be challenged by taxpayers.

The equalization factor, or “multiplier,” is established each year for Cook County to bring property tax assessments in line with other parts of Illinois. The equalization factor is determined by the Illinois Department of Revenue.

Property owners who think they are over-assessed should appeal now, Griffin advises. Visit the Cook County Assessor’s website to find comparable properties or start the appeal process. The assessor has concluded appeals for 2020.