Appraisals, One-Third Explained, Statutes, and Assessments
Several property owners have sent in copies of an appraisal, which was done for refinance or mortgage purposes. Before you submit that type of appraisal please read the fine print. It will normally state in the body of the appraisal that the intended use of the appraisal is for a mortgage/refi transaction. It will also state the intended user is the lender/client.
The Assessor is not the intended user of the appraisal nor is the use of the appraisal intended for real estate assessment or tax purposes. As such, this type of appraisal is given little weight in determining the assessed value of your property.
There are several types of appraisals and appraisal forms. The type to be submitted for assessment purposes is referred to as an ad valorem or property tax appraisal. The intended use is to be for real estate tax purposes and the intended user is the Assessor, Board of Review and/or the State Property Tax Appeal Board.
The explanation begins with the Illinois Statutes, the Property Tax Code.
(Sec. 9 145) Statutory level of assessment. …Property shall be valued as follows: Each tract or lot of property shall be valued at 33 1/3% of its fair cash value.
(Sec. 1 55) 33 1/3%. One third of the fair cash value of property, as determined by the Department of Revenue’s sales ratio studies for the three most recent years preceding the assessment year, adjusted to take into account any changes in assessment levels implemented since the data for the studies were collected.
The Illinois Department of Revenue and State Statute sets forth laws and guidelines that an Assessor must follow to assess property. Most important is to assess at a third of market value. However, as you can see from the statute above, 33 1/3% is based on the prior three years of sales and assessment data.
Remember, the market value listed on your tax bill or calculated from your General Reassessment Notice is based on three prior year’s sales and assessment data. It is not today’s estimate of market value.
The Sales Ratio Study is the analysis of the mathematical relationship between a sale and the prior year’s assessment – a ratio. The ratio is the assessment divided by the sale price. The prior three years of all sale ratios in an area or jurisdiction determine if assessments need to be increased or decreased.
Up to and including 2011, the Sales Ratio Study has only used “arms length” sales, which is the amount for which a property can be sold, in the due course of business and trade, not under duress, between a willing buyer and a willing seller. However, new legislation was passed to include ‘in lieu of foreclosure’ sales, short sales and other compulsory sales in the Study beginning in 2012. The impact of that change indicates assessments will drop again in 2012, possibly as much as 6% – 8%.
Other Statutes in the Illinois Property Tax Code
(35 ILCS 200/1 50)
Sec. 1 50. Fair cash value. The amount for which a property can be sold, in the due course of business and trade, not under duress, between a willing buyer and a willing seller.
(35 ILCS 200/1 23)
Sec. 1 23. Compulsory sale. “Compulsory sale” means (i) the sale of real estate for less than the amount owed to the mortgage lender or mortgagor, if the lender or mortgagor has agreed to the sale, commonly referred to as a “short sale” and (ii) the first sale of real estate owned by a financial institution as a result of a judgment of foreclosure, transfer pursuant to a deed in lieu of foreclosure, or consent judgment, occurring after the foreclosure proceeding is complete.
(35 ILCS 200/9 180)
Sec. 9 180. Pro rata valuations; improvements or removal of improvements. The owner of property on January 1 also shall be liable, on a proportionate basis, for the increased taxes occasioned by the construction of new or added buildings, structures or other improvements on the property from the date when the occupancy permit was issued or from the date the new or added improvement was inhabitable and fit for occupancy or for intended customary use to December 31 of that year…
When, during the previous calendar year, any buildings, structures or other improvements on the property were destroyed and rendered uninhabitable or otherwise unfit for occupancy or for customary use by accidental means (excluding destruction resulting from the willful misconduct of the owner of such property), the owner of the property on January 1 shall be entitled, on a proportionate basis, to a diminution of assessed valuation for such period during which the improvements were uninhabitable or unfit for occupancy or for customary use….
(35 ILCS 200/9 205)
Sec. 9 205. Equalization. When deemed necessary to equalize assessments between or within townships or between classes of property, or when deemed necessary to raise or lower assessments within a county or any part thereof to the level prescribed by law, changes in individual assessments may be made by a township assessor or chief county assessment officer, by application of a percentage increase or decrease to each assessment.
(35 ILCS 200/9 210)
Sec. 9 210. Equalization by chief county assessment officer; counties of less than 3,000,000. The chief county assessment officer in a county with less than 3,000,000 inhabitants shall act as an equalizing authority for each county in which he or she serves. The officer shall examine the assessments in the county and shall equalize the assessments by increasing or reducing the entire assessment of property in the county or any area therein or of any class of property, so that the assessments will be at 33 1/3% of fair cash value. … For each township or assessment district in the county, the supervisor of assessments shall annually determine the percentage relationship between the estimated 33 1/3% of the fair cash value of the property and the assessed valuations at which the property is listed for each township, multi township or assessment district. …With the ratio determined for each township or assessment district, the supervisor of assessments shall then determine the percentage to be added to or deducted from the aggregate assessments in each township or assessment district, in order to produce a ratio of assessed value to fair cash value of 33 1/3%. That percentage shall be issued as an equalization factor for each township or assessment district within each county served by the chief county assessment officer. The assessment officer shall then change the assessment of each parcel of property by application of the equalization factor.
(35 ILCS 200/12 10)
Sec. 12 10. Publication of assessments; counties of less than 3,000,000. In counties with less than 3,000,000 inhabitants, as soon as the chief county assessment officer has completed the assessment in the county or in the assessment district, he or she shall, in each year of a general assessment, publish for the county or assessment district a complete list of the assessment, by townships if so organized. In years other than years of a general assessment, the chief county assessment officer shall publish a list of property for which assessments have been added or changed since the preceding assessment, together with the amounts of the assessments, except that publication of individual assessment changes shall not be required if the changes result from equalization by the supervisor of assessments under Section 9 210, or Section 10 200, in which case the list shall include a general statement indicating that assessments have been changed because of the application of an equalization factor and shall set forth the percentage of increase or decrease represented by the factor. The publication shall be made on or before December 31 of that year, and shall be printed in some public newspaper or newspapers published in the county. In every township or assessment district in which there is published one or more newspapers of general circulation, the list of that township shall be published in one of the newspapers.
My Assessment Decreased – My Tax Bill Increased
Assessed values are decreasing and will continue to do so as long as the real estate market continues it’s downward trend. However, the other component to your tax bill is the funds needed by your local taxing bodies.
The assessed value determines your portion of the overall tax burden. The tax burden is the individual taxing bodies request for money, there is a list on your tax bill of all the taxing bodies that provide services to your particular area. When these taxing districts levy for more than the prior year the overall increase is reflected in your tax bill.
Your tax bill will decrease when the taxing bodies request the same amount or less than they did in the prior years.
Due to legislative action, in 1991 the Property Tax Extension Limitation Law (PTELL) became law. The Tax Cap, as it is known, states property tax extensions (levies) are limited to a 5% increase or the increase in the national Consumer Price Index (CPI) which ever is the least amount. The limitation can be increased for a taxing body but only with voter approval.
If there is any other information you’d like to know about please check out our website. If you cannot find what you are looking for please contact our office by phone or email. Our email address is email@example.com. We are more than happy to educate every property owner about the property assessment and tax system in Illinois.
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