Apostal Group

Frequently Asked Questions: All about the homeowners tax exemption Niko Apostal 07/06/16

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A heads up to anyone who owns multiple properties in and around Chicago: Cook County is significantly stepping up efforts to crack down on violations of the homeowners tax exemption. What exactly does this mean? Here’s our handy explainer:

What is a homeowners tax exemption?

The homeowners exemption is a tax break given to homeowners on the property that they claim as their primary residence. According to our founder and principal broker Niko, the savings can be significant, particularly on high-end properties.  In some rare cases where married couples have separate primary residences, a couple may end up claiming two different primary residences, but in most cases, only one property can be claimed as a primary residence. The Cook County Assessor’s Office has recently started an enforcement campaign to identify and penalize anyone claiming ineligible homeowners’ tax exemptions.

I have never applied for a homeowners tax exemption. How could I have more than one?

Cook County homeowners exemptions are often automatically applied. If you’ve recently bought or inherited a property, it is entirely possible that the real estate attorneys, brokers, and title and mortgage companies did not adequately review property tax bills for improper exemptions. Additionally, if you live in a home that you claim as your primary residence and then decide to move to a new space and rent out your old home, the law says that it is your responsibility to contact the County Assessor’s Office and inform them of the change in occupancy.  However, many residents don’t know this or haven’t done this, and the makes it so that people can end up with three or more “primary residences” — whether through intention or through an oversight. This is a violation that the County has stepped up efforts to penalize.

What happens if I do have too many homeowners tax exemptions?

If you are found to be in violation of the Homeowners Exemption claim, the Erroneous Exemptions Statute allows the Cook County Assessor to demand repayment for as far back as 6 years. This is true even if you did not personally apply for the exemption.

What is the penalty for being in violation?

The Cook County Erroneous Exemptions Statute requires homeowners found to be in violation to repay all principal, as well as steep interest payments amounting to 10% per annum and penalties totaling 50% of the tax due.

How does the County determine who is in violation?

The Cook County Assessor’s Exemption Department reviews several documents in an effort to determine where ineligible exemptions have been applied, including property tax bills assigned to non-taxpayer names, (e.g. LLCs), multiple tax bills with same-named taxpayers, multiple deeds with same named owners and death certificates.

How will I know if I am found to be in violation?

When the Assessor’s Office believes that it has identified an erroneous exemption, it will mail out a Notice of Discovery letter to homeowners deemed ineligible for certain exemptions.

The first thing you should do if you receive a Notice of Discovery is to call the Assessor’s Office at (312) 503-7434 or visit the Assessor’s Erroneous Exemption Office at 118 North Clark Street, 3rd floor, so that you can speak to the Erroneous Exemption staff to explain facts about your property of which they are unaware. If you have received a Notice of Discovery and you’re not sure whether or why you are receiving more than one eligible exemption, verify this by looking at your 2nd Installment tax bills for each property.

What if I do nothing?

The Assessor has 3 years from the date a taxpayer is served with a Notice of Discovery in which to conduct an investigation. Notice recipients who do nothing and are found to be in violation of the Statute will receive a Notice of Intent to Record Lien.

This Notice of Intent to Record Lien will identify the amount of the erroneous exemptions (including the interest and penalties) claimed by the Assessor. It also provides a hearing date at which you can defend yourself or hire an attorney to appear on your behalf. (Cook County Erroneous Exemption hearings are held every Thursday at the Cook County Building at 118 North Clark Street, Chicago, Illinois. Waits of up to 2 hours for a hearing to start are not uncommon. Having an attorney at one of these hearings is advisable.)

Will this go on my credit score?

A Notice of Intent to Record Lien does not affect a taxpayer’s credit rating, the ability to sell a home, nor can it be counted as a personal liability.

What are my rights regarding violations of the Homeowners Tax Exemption?

With the passage in 2015 of SB 780, the Illinois legislature clarified the Assessor’s role in removing exemptions applied in error following property sales so taxpayers would not be charged the steep costs of back taxes, penalties and interest.

With the passage in 2016 of SB 2427, taxpayers are now assured, provided they give proper notice (waiver forms) to the Assessor by March 1 of the calendar year of their request that an exemption be removed, that they cannot later be charged for penalties and interest if the county improperly applies the exemption that year. Homeowners will not have to undergo the time consuming Erroneous Exemption hearing process.