The topic of taxes may not make for the most riveting conversation, but it’s important to understand your lingering tax questions if you anticipate buying a home soon. A question our real estate team commonly hears is, “do you pay property taxes on a condo?”
If you’ve wondered the same thing, sit back, relax, and let us walk you through condo taxes in this condo property tax guide.
Property Taxes on a Condo
To get straight to the point, the answer to the above question is “yes.” Condo owners should expect to pay property taxes on a condo. In Illinois, you are required to pay taxes on any property you own, even if a property was gifted to you or you own a rental property.
While there is a common assumption that property taxes are lower for condo owners than single-family homeowners, this is not always the case. Property tax is determined by a home’s assessed value and the mil levy or local tax rate.
In Illinois, there is no standard property tax rate. Chicago’s average property tax rate is 2.19 percent, and the average annual property taxes are $10,950. Unfortunately, Illinois, Chicago in particular, is known to have steep property taxes. In fact, it’s the second-highest property tax burden following California.
However, Illinois does have a list of property tax exemptions to help ease the tax burdens for some folks.
The property tax cycle in Illinois generally extends over a two-year period. A tax year is the year of assessment and reflects the value of real property from January 1 through December 31 of that year. The actual tax bills are paid in the year following the tax year. In most counties, property taxes are paid in two installments, usually June 1 and September 1.
Other Condo Tax Implications
As a condo owner, there are a few other helpful tax pointers to keep in mind.
When you file your taxes, you should see if you qualify for the property tax credit on the individual income tax return.
To save on annual taxes, homeowners can take the following deductions:
- The amount paid in property taxes
- The amount paid in interest on your mortgage
- The amount of any casualty loss to your property to the extent not compensated by insurance.
If you ever sell your condo, the State of Illinois charges a transfer tax of $1 per $1000 of the sale price. The county will charge $. 50 per $1000 of the sale price. For example, a sale price of $350,000 will generate a state and county transfer tax of $525.
Additionally, since property taxes are paid in arrears, home sales generally include a prorated property tax credit to the buyer. For example, if the annual taxes on your home are $5,000, and your sale closes beginning of April, you will credit the buyer the taxes for the three months of the year before they purchased the home. At the end of the year, the buyers would pay the full property taxes owed.
We hope this brief guide has helped answer some of your questions beyond “do you pay property taxes on a condo.” If you want additional support during your condo search, connect with one of our experts today!