Understanding the ins and outs of Chicago’s tax system is an ongoing process that has certainly kept Accounting Solution Ltd.’s dedicated CPA’s hard at work over the past few decades. Every year we experience a number of changes that alter how our business, and those owned by our clients, actually operates. One of the more recent alterations to local tax laws regards around property taxes, which have been hiked up about ten percent over the past year. These changes were provoked by City Hall and Chicago Public Schools attempting to create a pool of funds to pay off the pensions of public servants including police, fire fighters, and teachers.
This hike is something that will affect property owners and business owners in a number of ways. Anyone who owns a home within the city will experience increased fees, with a residence valued at $224,500 facing about $4,000 in annual property taxes. This is an increase of about $363, or 11 percent. These fees do vary depending on which area of the state one lives in, as more suburban regions such as Cook County face increases that range from 3.9 to 6.5 percent. Despite these disparities, research performed by the Chicago Tribune states that property owners within densely populated areas of Chicago still pay significantly less than their suburban counterparts. Taxing districts within the suburbs have a tendency to be much more varied, as the average price of a home can exist along a wide monetary spectrum. Because of this, there is much more variation in terms of local tax hikes when compared to the inner city itself.
Business owners will also feel the effects of these alterations, as their properties are effectively eligible to face tax increases of approximately 9.3 percent. Once again, suburban areas are treated differently, with some portions of Cook County even witnessing decreases of 3-4.2 percent. These reductions are primarily meant as an incentive to lure investors and entrepreneurs from other, busier parts of the state.
While these increases are likely to confuse and alarm many property owners, they serve the purpose of providing public servants with a stable pension fund. For several years there have been issues with financial bodies such as the Chicago Teachers’ Pension Fund, a monetary pool that has been largely neglected over the past decade due to an ongoing history of reduced or non-existent payments. Similarly, pension funds meant to cover the needs of retired police officers and fire fighters have faced neglect over the years. By pushing forward tax hikes, the city hopes to cover these costs and ensure these individuals are compensated for their services.
These changes also shed light upon various complaints that have been put forward over the years regarding striking discrepancies between the property taxes of the wealthy versus the poor. Various studies have concluded that the value determinations made by assessors have targeted those in lower income brackets, impacting them in a more serious fashion when compared to their richer counterparts. Property tax changes will be accompanied with more serious regulations, which will ideally serve to curb this issue.
Times are changing within our great state, and Accounting Solutions Ltd. is continuously on the look out for information that can help our clients and the people of Chicago understand how shifting tax laws can affect them. We are happy to answer any questions regarding property taxes and will dutifully help prepare new homeowners or budding entrepreneurs for their future investments.
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chris@accountingsolutionsltd.com
