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There are growing concerns that increases in property tax bills due to recent re-evaluations are pushing senior citizens to leave their homes.
Some seniors take the Senior Exemption, which lowers their property tax based on reaching age 65 and above. There is also The Senior Freeze, for eligible senior homeowners whose household income is no higher than $65,000 per year, including all residents of the home.
But what do those seniors in the middle do? They may be above the $65,000, even by $1, and can’t afford the new property tax based on the new re-evaluations of their home value. There is one additional choice – a Senior Tax Deferral.
In Illinois, this program allows qualified seniors to defer a maximum of $7,500 in property taxes per tax year (including 1st and 2nd installments) on their primary home. This is a loan, not a discount, from the State of Illinois and is paid when the home is sold, or upon the death of the owners.
The deferral allows property owners aged 65 or older to “borrow” money from the state to cover their property taxes.
For some, this can make the difference in staying in their home, falling behind on their taxes or having to sell.
The requirements for the program are:
- Be 65 years of age or older on June 1 of the year the application is filed.
- Have a combined household income of $65,000 or less.
- Have lived in the home for the past 3 years.
- Have no overdue property taxes or pending special assessments.
- Maintain adequate fire or accident insurance.
You may defer up to $7,500, with an interest rate 3%. If the taxes are greater, the owner is still responsible for balance. It is the owner/taxpayer’s responsibility to pay the remaining amount to the Cook County Treasurer’s Office & late payments are assessed at an interest of 0.75% per month until the tax is paid in full.
Taxes must be re-paid immediately upon the sale or transfer of the property, or within one year after death.
What about your Mortgage?
Although written approval from your mortgage lender is not required, seniors should notify their mortgage lender of their intent so they can confirm that participation in this program will not violate any terms of the mortgage agreement or any “reverse-mortgage” agreement.
What if my property is in a Trust?
- The only trust that is allowed for this deferral is an Illinois Land Trust with the senior and their spouse as the sole beneficiary(s).
- The Illinois Land Trust handles ownership. This is similar to a revocable living trust. The title is held by a trustee while the senior/owners retain the ability to enjoy all the rights and responsibilities of owning the property.
- When property is placed into a land trust, the interest is essentially converted to personal property. The benefits of that characterization are that the property becomes simpler to manage and convey than an interest in real property.
Applications for the fiscal year must be submitted by March. Per state law, there are no time extensions OR Certificates of Error for the deferment.
At cookcountytreasurer.com, under the “Seniors” tab, seniors can find information about the program, a link to a downloadable brochure and an application that can be printed. In addition, the Cook County Treasurer’s Office has videos in English, Spanish, and Polish on the website and social media platforms.
If you have exhausted other resources & exemptions, the deferment may be the best alternative to staying or leaving your home.
For more real estate questions, contact Karen Daugerdas, Coldwell Banker REALTOR & Seniors’ Real Estate Specialist at 847.494.1102 or karen.daugerdas@cbrealty.com.
