Sweeping housing legislation was recently passed. The legislation is designed to offer assistance to troubled homeowners at risk of foreclosure and provide government assistance to bolster Fannie and Freddie with a temporary rescue plan.

A few of the key provisions that will most directly impact the consumer include…

• A permanent increase of conforming loan limits to $625,500 from the current $417,000 in high-cost areas.
• A first time home buyer credit of 10% of purchase price but not to exceed $7,500. Important to recognize that this is really an interest free loan to be paid back over 15 years.
• A grant to states to purchase and restore foreclosed properties.

And one other provision that may interest you…

Buried deep within the legislation (page 690) is a change in the capital gains tax exemption rule. Prior to the new legislation, if a homeowner lived in the home as their primary residence for 2 of the past 5 years they could claim an exemption on capital gains of up to $250,000 if filing singly or $500,000 if filing jointly. Under the new legislation, the exemption is based on a ratio of occupancy as primary residance over the total ownership of the property. The Mortgage Reports discusses the calculation and the impact on home sellers.

When first proposed, Chicago home buyers were to bear the full transfer tax increase, but now it looks like sellers will pay the Chicago real estate transfer tax increase.

Flip side of the same coin in my opinion. A real estate tax increase on either buyer or seller seems to be ill timed.

Old news by now, but the Cook County 7% tax cap on property tax assessments has been renewed for the next three years.  Get the full story.

True story I’m embarrased to say.   A number of years ago my wife and I owned a townhouse.  We paid our taxes by mortgage escrow.  In other words, of our monthly mortgage payment, a small  amount (or not so small) was deposited in an escrow account.  When the Chicago tax bills came due each year, the mortgage company made the payments for us.  Very convenient.  What I didn’t know however, was that my tax payments were being applied towards my neighbors property two doors down.  This went on for about a year and a half.  How I found out, the tax sale process, and what it took to correct this situation are topics for another post(s).  No, my taxes weren’t sold. So at closings, I always advise my clients to check the Cook County Treasurer site after each tax bill is issued to ensure their taxes have been applied against the proper Property Index Number (PIN).  I sound like a broken record.  Your mortgage paperwork at closing, monthly satement, and property tax bill will reflect this number (note:  new construction is different).

March is a mixed month in Chicago.  On the positive side, March brings the first hints of warm weather.  Temperatiures are supposed to hit the 60′s this week.  On the not so good side, early March is usually the due date for the first installment of annual Chicago property taxes. One of the most common topics I receive questions on is Chicago property taxes.  While browsing through the file cabinets at my office I came across this handy reference.  Topics covered include The Cook County Property Tax System, Determining Property Assessments, Appealing the Assessment, Saving Money on Your Tax Bill, A Property Exemption Checklist for Homeowners, and A Property Tax Bill Checklist for Homeowners.  A quick read with some useful information and may even save you some money.  For more detail visit the Cook County Assessor website.

This is an especially important issue to address as taxes have the possibility of costing the purchaser thousands of dollars if a proper proration method is not agreed upon between the parties.  Taxes in Illinois are paid a year in arrears which means that in 2006, property owners paid the 2005 tax bill and in 2007, unit owners will pay the 2006 tax bill.  Often times, Developer’s contracts state that the developer will pay all taxes for the years subsequent to closing.  If the contract does not state this, it may be wise to make this request.  Real estate taxes for New Construction building can be a bit confusing.  For example, a three-flat condominium that was built 5 years ago most likely has 3 individual tax ID numbers which means that each of the unit owners receives their very own tax bill.  A new construction three-flat is a little different.  It usually takes a period of time until the County Assessor’s office assigns individual tax id numbers to the new units.  Thus, when a tax bill comes out, it is for the entire building as opposed to the individual units.  The unit owners will have to get together and determine each unit’s proportionate tax responsibility which is usually based on the percentage interest in the common elements multiplied by the tax bill. It is important to determine how the new construction is being assessed.  For example, if the area is being assessed as vacant land, there is a possibility that the assessed value will go up either before or after closing which will amount to a higher tax burden.  If the Purchaser does not perform his/her due diligence, he/she may stand in the position of receiving a tax credit at closing for an amount far less than what he/she actually deserves. Prior New Construction Series Posts

• Purchaser Litigation
• Appraisal Contingency
• Closing
• Warranty

Have to give props to the Sellsius blog.  They have done a wonderful job of capturing the tax assessment fiasco surrounding Governor Blagojevich’s home.

Here’s the story. Illinois Governor Rod Blagojevich’s 3,817 square feet home (2nd largest in his neighborhood) only received a 1% tax assessment increase while his neighbors got bumped more than 36% (on average). It seems when asked for an explanation, the tax assessor said numbers are crunched based on square footage and that the Governor’s home was previously OVERVALUED and is now in line. So much for the argument that public data is accurate. This seemed to satify some but not the skeptics. It seems no matter how you crunch it, the Governor’s home is either undervalued (lower tax per square footage) or his neighbors are overvalued. 

Man I need to run for public office.

In the course of representing a Seller in the sale of his property, I discovered that there was no Homeowner Exemption listed on his tax bill.   The Cook County Treasurer’s Office recently posted the 2nd installment of the 2005 tax bill.  All property tax exemptions in Cook County, are reflected in the 2nd installment tax bill.  If you know your tax parcel ID number, which is listed on your tax bill, deed, and/or title commitment to name a few, I would suggest you go to the following website: www.cookcountytreasurer.com.  If you owned and resided in your property as of January 1st, 2005, and the property is your principle residence, you are entitled to the Homeowner Exemption for the tax year of 2005.  You can check the status of your exemption at the aforementioned website.  If you are entitled to the Homestead Exemption but did not receive the Exemption, you can file a Certificate of Error with the Cook County Treasurers Office.  The Treasurers Office will recalculate your tax liability, this time applying the homestead exemption, and send to you a refund for the difference.  The Certificate of Error form is not listed online but feel free to either contact this office, or visit the Cook County Assessors Office to request the form.  The Assessor’s Office can issue the Homeowner’s Exemption Certificate of Error for at least 3 YEARS prior to the current tax year.  Thus, you may be entitled to a refund on prior years taxes as well.  You will have to submit some documentation to verify that you did, in fact, reside at the property in question on or before January 1st, 2005 for 2005 taxes or before January 1st, 2004 for 2004 taxes, etc.  A list of the requirements is attached to the Certificate of Error. I prepared the Certificate of Error for my client.  A couple minutes could earn him hundreds of dollars.  I strongly recommend you take a second to look this up.  This may be the easiest money you can earn.

May 27, 2006 Dear friends, neighbors and community leaders: The Triennial Reassessment has begun. This newsletter from TRAC will bring you up to date on what happened in Springfield. The 7% tax measure did not pass. Please read the account from Springfield because it will give you some insight on the politics that went on. We have some well-financed opposition for the renewal of the 7%. We must all come together over the coming months and make our voices heard. Our elected officials are waiting to see how much noise everyone is going to make before they do something. TRAC will keep you posted on any new developments. TRAC urges you to make phone calls to the Mayor, Speaker Madigan and Governor Blagojevich. The phone numbers are in the newsletter. If you are having any meetings that you would like us to come out to – just give us a call! You can reach us through our web site at www.trac-il.org. Pass the TRAC newsletter around to your friends. Make copies of it and hand it out at your meetings or over the backyard fence! TRAC will also be sending the newsletter out to our members that don’t have access to the Internet. We need an army of angry citizens in order to affect change! Thank you for your continued support. Sincerely, Barb HeadPresident Tax Reform Action Coalition

Current Cook County board president to seek fourth term and hints at need to raise county property taxes. View the complete article at Chicago Businss: Stroger to run again, hints at county property tax hike For more information contact Jeff Kerr by phone at 773-326-0048, email, or visit www.Kerr-Properties.com.

Concept: Properties are not sold and bought but exchanged via a neutral third party. As a result taxes can be deferred. Rules: A federal law permits you to defer the payment of capital gains taxes when you sell (exchange) property and buy (replace) it with other “like kind” property or properties of equal or greater value. Very specific rules apply. Benefit: Deferring taxes creates extra cash for you … additional cash on hand creaes wealth. For a FREE 1031 Exchange report contact Jeff Kerr (http://www.Kerr-Properties.com) at 773-326-0048 or by email at jeff@kerr-properties.com.