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It's been a bad decade for property taxes How much are you really paying as a share of your home or office market value? The Civic Federation has some educated guesses.

Crain's Chicago Business

Thursday, January 10, 2019  |  Article  |  Greg Hinz

Taxes, property (87)

As the real estate market continues its slow recovery here, the share of your home or office value that you pay in property taxes finally has begun to stabilize and, in some cases, drop.

But it's still a lot higher than it was a decade ago, according to a new report issued by the Civic Federation. 

And although residential owners in Chicago proper are still somewhat better off than their suburban peers, the city advantage is melting away, as higher taxes, pushed through by Mayor Rahm Emanuel to pay off old pension debts, kick in.

The data comes from the federation's annual report on estimated effective property tax rates. That's the percentage of a property's estimated market value that is owed to the tax collector, once items such as the state equalizer and varying assessment and tax rates are adjusted for. This particular study—which you can read at the bottom of this story—estimates effective rates for Chicago and a sample of 28 suburbs for tax year 2016 (payable in 2017, the most recent year for which data are available) and then compares them with prior years.

In the latest year, rates generally dropped in the collar counties. In Cook County, which assesses residential and commercial properties at different rates, commercial rates dropped in every community measured, with residential rates dropping in some (Orland Park and Arlington Heights) and rising in others (Oak Park, Evanston and Glenview).

In the city, residential estimated effective property tax rates rose 2.2 percent, relatively high among the municipalities measured. A 0.2 percent drop in commercial rates was well below those in most suburbs.

Chicago still has a lower effective property tax rate on homeowner-occupied houses than all but a few other communities, including Oak Brook and Lake Forest. 

But over the past decade, residential rates in the city have risen a whopping 35.3 percent. In other words, even as the new tax hikes fully kick in, Chicagoans are paying one-third more than they did in 2007, as a share of home value.

The federation's figures do not include the impact of widely used homestead and senior citizen exemptions. But they do suggest why property taxes have become a hot issue in the race for mayor.

Effective commercial rates are up considerably more, generally at least 66 percent in Cook County and a third or more in the collar counties. Commercial values in some areas have been recovering quickly since 2016, such as downtown Chicago.

Civic Federation President Laurence Msall underlined that the watchdog groups' estimates are just that—estimates—and that individual properties have fared differently.