The bad news: Cook County tax bills are going to be late this year, landing in mailboxes right around the holidays. The good news: they’ll be essentially the same amount as last year. Tax rate increases for the second installment bills will be less than four tenths of one percent in the city.
The federal tax credit for home buyers is running out. The Treasury Department says the program has been a success, helping 1.8 million people buy homes, but many experts say the program wasn’t cost effective. The New York Times estimates that for every new buyer who was lured into the market by the credit, there were three more to received it who would have purchased a home without it anyway. To take advantage of the benefit, buyers must be under contract by April 30, and close by July 30, 2010.
The $8,000 tax credit for first-time home buyers expires on November 30, unless Congress acts on a number of proposals on the table to extend it. Over 1.8 million buyers will have taken advantage of the credit by the time it expires. Lawmakers are considering extending that deadline, making the credit available to all home buyers, not just first timers, and increasing the amount to $15,000. More on the proposals at CNN/Money.
There is a fair amount of confusion about the new $8,000 tax credit available to qualifying first-time home buyers. In the past, first-time buyers could get a $7,500 credit, but it had to be repaid to the government over time. The new credit does not have to be repaid, and can be claimed on either your 2008 or 2009 tax return. For instance, if you bought a home for the first time in 2008, but have already filed your taxes without taking the credit, you can claim it on your 2009 returns. Essentially, it is a one-time gift from the government toward the purchase of your first home.
The video above from the Illinois Association of Realtors explains the tax credit in more detail, as does Mary Ellen Podmolik in her weekly column in the Chicago Tribune.
A $7,500 nudge for first-time homebuyers — chicagotribune.com
As part of the sweeping housing bill passed by Congress last week, first-time home buyers will get a tax credit of $7,500 if they make their purchase from April 9, 2008 through June 30, 2009. Only first-time buyers or those who have been renting for the past three years are eligible, and the home must be a primary residence. The credit is adjusted for those at higher income levels as well, but it provides a nice little incentive for those looking to test the waters on a new home within the next year.
If you work out of a home office, the IRS lets you deduct a percentage of your home’s total expenses, based on the size of the office. But the office has to meet a certain “regular and exclusive” criteria, meaning it must be primarily used for work, not just part time duty. More from the Tribune.
The state congress voted to extend the Cook County homeowner’s property tax exemption at the last minute on Friday, continuing the allowance for another three years. The homeowner’s exemption is an attempt to cap property tax increases due to rising property values at seven percent per year. The new exemption will be increased from $20,000 to $33,000.
The Illinois House and Senate are making moves to compromise on legislation to extend the 7 percent property tax cap in Cook County. Earlier this year, the Senate had passed a bill increasing the Homeowner’s Exemption from $20,000 to $60,000, but House members introduced a competing bill that greatly reduced that amount. House leaders said the Senate plan was overly generous, but supporters of the Senate plan contend that the House bill will still allow property taxes to rise 40 percent over the next two years.
It had appeared that the two sides were at an impasse and the tax cap legislation would expire, but Sen. Terry Link (D-Waukegan), chief sponsor of the Senate bill, said yesterday they would be willing to pass the House version as long as it includes provisions for review each year.
The 2005 second-installment Cook County property tax bills are coming out this week, but you don’t have to wait for the mail to pay them. As long as you know your property’s 14-digit tax PIN, you can pay your bill online at the Cook County Treasurer’s website. You can also pay your bill in person at 293 Chase Bank branches or 211 other participating community banks.
A quick rundown of this weekend’s real estate news sections:
The Cook Country Board is considering a proposal today that would cut property taxes on rental apartment buildings 27.5 percent over three years while shifting the burden to homeowners and commercial property owners. Those tax payers would see a 2 percent increase to make up the lost revenue. The proposal, which is expected to pass, is intended to create more affordable housing by easing the burden on landlords, and has the backing of Mayor Daley and County Assessor James Houlihan. While no tax increases are welcome, this one is relatively small, amounting to $80 on a typical $4,000 tax bill.
This year’s Cook County tax scavenger sale was held on Wednesday. The biennial event featured 20,000 land parcels with over two years of delinquent taxes for sale. Buyers can bid as little as $250 on the land, then the owner has between six months to two and half years to redeem the taxes. Otherwise the buyer can petition for a deed to the land. If the owner does redeem the taxes, the buyer can collect anywhere from 12 to 51 percent interest.
State and local government revenues are up, and some localities are refunding property taxes to home owners. Property taxes have increased 34 percent over the past five years, three times faster than inflation, according to the Bureau of Economic Analysis. Some places, like New York City, are giving a flat rebates to taxpayers. Other places like Pennsylvania are using casino revenues to fund rebates. No property tax news from Illinois or the City of Chicago yet, but we can only hope this trend catches on here.
We’re taking a break for the holiday the rest of this week, but we’ll be back Monday with a roundup of the weekend real estate news. Happy Thanksgiving!
Remember that scary story about how a Congressional commission recommended taking away tax breaks for mortgage interest and local property taxes? Well don’t get too scared yet. Illinois Rep. Jerry Weller (R), says he and six other Republicans have enough support to kill the proposal if it ever comes up for debate.
Today is the last day to pay Cook County property taxes. After the close of business today, unpaid bills will be charged a 1.5 percent late fee on the amount each month. But Mayor Daley announced that there will be no property tax increase for 2006, the third straight year. Instead, they are offering a $100,000 grant to small businesses and homeowners willing to grow gardens on their roofs. The grants are part of a program encouraging green roofs that can reduce energy costs by 30 percent.
