Renter Alert: Higher 2015 Real Estate Taxes Mean Hefty Rent Hikes
Thousands of Chicago apartment renters in posh lakefront neighborhoods soon may see hefty rent increases as a result of recent 2015 property tax increases due August 1st, experts say.
While tens of thousands of shocked Chicago home and apartment owners still are reeling from sharply higher 2015 property-tax bills they’ve received in recent weeks, soon the other shoe will drop on apartment renters.
Experts say Chicago homeowners’ tax bills rose an average of 12.8 percent. However, the tax hikes ranged from 25 percent to 30 percent or more in apartment buildings in Old Town and Lincoln Park, and “hot” neighborhoods such as Wicker Park, Bucktown and Logan Square.
Mayor Rahm Emanuel said the city needs to raise $318 million in new revenue to pay for pensions of teachers, police and firefighters.
The tax increases, along with hundreds of dollars in new fees for city of Chicago garbage pickup, mean financially squeezed owners will be forced to raise rents to cover expenses.
An informal survey by The Home Front column revealed the following tax bill increases for small, “Ma and Pa” apartment buildings on Chicago’s North Side:
• Lincoln Park. The 2015 tax bill on a vintage graystone 6-flat skyrocketed 26.5 percent to $21,808 from $17,237. The Cook County assessor Joe Berrios said the market value of the building appreciated to $1,216,370 from $954,740.
The $4,571 annual tax increase—or $381 a month—means the landlord will be forced to pass along an average rent increase of about $64 per month to each tenant in the building.
• Old Town. The 2015 tax bill on a Victorian red brick 4-flat zoomed 23.7 percent to $21,644 from $17,488. The assessor said the market value of the building jumped to $1,181,190 from $968,260.
The $4,156 annual tax increase—or $346 a month—means the landlord will be forced to pass along an average rent increase of about $87 per month to each tenant in the building.
• Logan Square. The 2015 tax bill on a vintage graystone 4-flat in the Logan Square neighborhood catapulted 27.7 percent to $7,890 from $6,179. The assessor said the market value of the building increased to $456,800 from $358,710.
The $1,711 annual tax increase—or $142 a month—means the landlord will be forced to pass along an average rent increase of about $36 per month to each tenant in the building.
The Home Front survey generally found lower property tax increases on apartment buildings on the Far North Side, including the following example:
• North Lincoln Square. The 2015 tax bill on a 1920s yellow brick 4-flat in the Arcadia Terrace section of the neighborhood increased 8 percent to $6,828 from $6,324. The assessor said the market value of the building rose to $372,620 from $366,560.
The $503 annual tax increase—or $42 a month—means the landlord will be forced to pass along an average rent increase of about $11 per month to each tenant in the building.
“The property tax bill is determined by four factors: the assessment, the equalization factor, or ‘multiplier,’ the tax rate and the exemptions,” explained Michael Griffin, a Chicago real estate tax appeal attorney. “In a triennial tax-assessment year, homeowners should appeal their assessment because they are likely to see a new higher assessment.”
Homeowners also should review their exemptions because they can reduce their tax bill if they have the proper exemptions, Griffin noted.
Taxpayers can’t challenge the multiplier or the tax rate. The equalization factor is established each year for Cook County to bring property tax assessments in line with other parts of Illinois. The value is determined by the Illinois Department of Revenue. The multiplier was pegged at 2.6685 in 2015, down slightly from 2.7253 in 2014.
The main engine that drives up property tax bills is the amount of money spent by local government. For example, homeowners who read their 2015 tax bills will see sharply increased spending for schools, especially the Chicago Board of Education.
Chicago’s 2015 tax rate increased slightly to $6,867 per $100 of assessed valuation down from $6.808 per $100 of assessed valuation in 2014.
Experts say property owners who think they are over assessed should appeal now before they receive the 2016 tax bill. If they wait until the tax bill arrives in 2017, it will be too late to appeal.
Visit the assessor’s website: www.cookcountyassessor.com, or call 312-443-7550 to find comparable properties or start the appeal process.
If appealing at the assessor’s office does not lower the assessed value, there are two other appeal options: the Cook County Board of Review (312-603-5542) or www.cookcountyboardofreview.com and the Property Tax Appeals Board (217-785-6076). Or, call Michael Griffin, a tax assessment lawyer, at 312-943-1789.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.