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Thousands Of Chicago Property Owners Worried About Tax Exemptions

While members of the embattled Illinois Legislature are fighting with Gov. Bruce Rauner over the state’s pension problems and inflated budget, there are other issues in the world of real estate that need attention.

Thousands of Chicago homeowners are worried because Cook County Assessor Joe Berrios has sent threatening letters to more than 20,000 law-abiding suburban homeowners warning them that they are being investigated for tax fraud regarding bogus homeowner exemptions.

The assessor’s office has an eight-man investigative Fraud Unit filled with seasoned ex-Chicago Police detectives who are actively looking for property tax cheaters. These are not mindless book-worm bureaucrats, friends and neighbors. These street wise former CPD detectives have seen everything.

Got a neighbor who doesn’t like you? The assessor’s office now has a whistleblowers link on its website, so in effect, the county has been deputized to search down tax cheats. And no, it’s not just the past due taxes you’ll have to pay. There is a 50-percent penalty and interest charges added on, too.

The homeowner’s exemption can save hundreds of dollars in real estate taxes for every Cook County homeowner who resides in his or her own home. For example, the exemption for a typical North Side single-family home on the 2014 property tax bill amounted to a $478 tax cut.

The assessor’s office says the mass mailing was necessary to claw back millions of dollars from tax cheats who unfairly claim homeowner’s exemptions on properties in which they do not reside.

This includes rental investment properties and folks who are claiming a Senior Exemption they’re not qualified to take.

So, if you inherited a home from your parents, or some other elderly person who was claiming a Senior Exemption, and you haven’t notified the county that the senior citizen no longer owns the house, this would be a good time to get around to it.

The records proving this inconsistency are easy to find and cross check, and believe it, they now are finding a lot of people who are claiming property tax deductions that they do not deserve. The county believes there is more than $200 million in past due property taxes they can collect.

They’ve already collected $20 million in the 18 months the Fraud Unit has been in existence. If they find you first they’re going to look at the last four years of tax records and file a lien on your home if you can’t pay up.

However, an analysis of homeowners who received the threatening letters revealed the assessor simply targeted anyone who claimed an exemption on more than one parcel of real estate, including many homeowners who own a dwelling that sits on more than one lot, and therefore has more than one PIN, or property information number.

In other cases, the exemptions were never applied for by new owners, but automatically came with the property when it was transferred.

One real estate investor told this writer he purchased a small income property—a 4-flat—that formerly was owner occupied and carried a homestead exemption.

The new investor owner did not reside in the property and he overlooked the exemption on his tax bill because his real estate lawyer did not alert him to the issue. This oversight does not mean he is guilty of tax fraud, the investor said, but the assessor’s office will tell him that he is liable for the unpaid taxes going back four years, plus the penalty and interest charges, too.

This is why real estate investors are lobbying Gov. Rauner for the passage of Senate Bill 780, noted Michael J. Mini, executive vice president of the Chicagoland Apartment Association (CAA), which represents more than 7,000 apartment professionals who own and manage over 160,000 rental units in the Chicago area.

“This legislation is needed because of a situation that often occurs when residential property is transferred,” Mini said. “Previously granted homestead exemptions may not be removed and exemptions for which the property no longer qualifies may remain on the property.”

The CAA said Senate Bill 780 addresses this situation by requiring the new owner to apply or reapply for any homestead exemptions for which the property may be eligible.

To ensure that new homeowners receive all exemptions for which their property qualifies, the bill requires an assessor to mail information to the new owner regarding the rules and filing periods for applying and/or reapplying for exemptions.

If the new owner does not apply or reapply for exemptions, or the property no longer qualifies for an existing exemption, the legislation requires the assessor to cancel the exemption for any ensuing assessment year.

“While this legislation generally does not apply to large multifamily apartment buildings, it would help those who own and manage single-family rental properties and inherit past improper homestead exemptions to have them removed from the property tax records,” Mini noted.

Another nagging legal issue for landlords is the state law that requires them to pay interest on rental apartment security deposits.

It’s not that landlords are refusing to pay the interest. With interest rates so low, the required annual interest payments are so low that the process has become an accounting headache. (The current security deposit interest rate for 2015 is only 0.01 percent.)

This is why real estate investors and the CAA are lobbying the governor for the passage of House Bill 1319, said Mini.

House Bill 1319 amends the Security Deposit Interest Act by modifying the requirement that a lessor (landlord) pay accumulated interest to a resident within 30 days after the end of each 12-month rental period. The bill limits the requirement to pay interest on security deposits to that which has accumulated in an amount of $5 or more.

“With interest rates at historic lows, the $5 threshold makes common sense and will provide administrative relief associated with the handling of a negligible amount of security deposit interest,” explained Mini.

Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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