As a first-time home buyer property taxes can make you feel like a fish out of water. After all, there is no such thing when renting. So, this week I will go over the state of Illinois' policy and what prorating taxes means.
Homeowner’s are well aware of property taxes. However, they may seem like a hidden expense for many because they are frequently paid by escrow, and included in your monthly mortgage payment. Once your mortgage is paid off, you are left to understand, and make sure you make your property tax payments promptly. The state of Illinois’ unusual policy of charging taxes in arrears causes even more confusion for those looking to sell or buy a home. Paying in arrears means that each year the tax bill for the previous year comes out in May (may vary: check your local county assessors website), and the two payments are due for the previous year.
COOK COUNTY DUE DATES:
- 1st installment due the first business day in March
- 2nd installment varies: The Second Installment bill relies on the delivery of various sets of data by other state and county agencies. Unlike the First Installment bill, the Second Installment bill reflects the new assessed values, assessment appeals, exemptions, state equalization factor, and taxing-district tax rates
DUPAGE COUNTY DUE DATES:
- 1st installment due the first business day in June
- 2nd installment due the first business day in September
Here is an example of how paying taxes in arrears works:
An Illinois homeowner’s property tax bill for the taxes incurred while you lived in your home in 2015 arrived in May of 2016. The first payment was due June 1, 2016, and the second payment was due September 1, 2016 (DuPage County).
So, when you purchase your first home in, let’s say, May of 2016. You will receive a property tax bill that month for the property taxes incurred during 2015. However, since you did not live in the home during 2015 it is not your responsibility for those payments. Instead, the seller is responsible because he or she was living there that time last year and part of this year. This will occur during the closing when the seller will credit the buyer for those property taxes at closing. Now, let’s put this into a real life example to bring it all together.
The Lin’s lived in their home from 2011 to 2016. Then, they sold their home this Fall to the Smiths with a closing in October of 2016. This means the Lin’s property tax responsibility for their home would cover all of 2015 and then the 10 months with October included. The Lin’s paid their first installment on June 1st, 2016, which means at closing they owe the Smiths for the second installment due in 2016.