Written by Ron Kingsley, LCA Tax Attorney and Owner
Property taxes in Lake County are a growing concern to landlords and their bottom lines. As an investor, are you taking advantage of every exemption to limit property tax costs? Most homeowners know that their primary residence may qualify for the general homestead and senior exemptions. However, a single-family home (or condominium) tenant’s residence may also qualify if the tenant’s lease states that the tenant is responsible for the property tax liability. Under this arrangement, the tenant would continue to pay monthly rent that includes the property tax liability, and the landlord would write the property tax checks payable to the county (i.e., business as usual).
With regard to the general homestead exemption, 35 ILCS 200/15-175(f) states:
This annual exemption is available for “residential property that is occupied by its owner or owners as his or their principal dwelling place, or that is a leasehold interest on which a single-family residence is situated, which is occupied as a residence by a person who has an ownership interest therein, legal or equitable or as a lessee, and on which the person is liable for the payment of property taxes.”
The value of the $6,000 ($8,000 beginning with the 2023 property tax bill, payable next summer) general homestead exemption is a function of the property tax rate. The highest 2022 property tax rates were, respectively, 13.98%, 14.13%, and 14.29% for Lake Villa, Waukegan and Zion Township properties. Thus, for 2022, the maximum property tax savings that could be obtained through the “tenant approach to the homestead exemption” would be $839, $848, and $857, respectively.
Note that a landlord must advise the Chief County Assessment Office (“CCAO”) when a tenant has vacated his or her property. Contact the CCAO for a General Homestead Exemption Application relevant to the lessee circumstance, which must be submitted annually to the CCAO. (Also note that the CCAO may require that additional conditions be met in order grant the exemption.)
Lake County Appeal recommends that a landlord looking to obtain this exemption for his or her property contact the Lake County Assessor’s office at (847) 377-2050 or review the information at: https://www.lakecountyil.gov/436/General-Homestead-Exemption. Lake County Appeal also recommends that a landlord consult with his or her income tax advisor regarding the deductibility of the property tax payments for purposes of federal and state income taxes.