How the Real Estate Tax System Works

The real estate tax system is an ad valourem tax system. That means that real estate taxes are applied according to the value of the property. By state law the ratio of assessed value to market value is 33.3333%. Thus a house that sells for $150,000 on the open market should have an equalized assessed value of $50,000. How this all occurs and a tax bill generated is called the Tax Cycle. The tax cycle occurs over a two year period and many parts of government are involved.

The Tax Cycle:

On January 1 st of the tax year the township assessor receives the previous year’s list of taxable parcels from the county clerk. The township assessor updates the list adding to it new parcels and new construction. The assessor then places an assessed value on all parcels based on conditions as of January 1 of the tax year. The assessor uses local sales and a three year sales ratio study conducted by the Illinois Department of Revenue to help in ascertaining the assessed value. When the township assessor is satisfied that his list and values are as correct as he can make them, he certifies his list and values to the Supervisor of Assessments. The Supervisor of Assessments reviews the material and equalizes the assessments for differences between other townships and other counties. This equalized assessed value is then published in a local newspaper and notices are sent to all owners whose assessments were changed. The Supervisor of Assessments then certifies the equalized assessed value to the County Board of Review. Within 30 days of the Township list being published the owners have the right to request a hearing before the Board of Review. After all owners, who requested hearings are heard. The Board of Review certifies the list to the County Clerk. The County Clerk submits the list to the Illinois Department of Revenue, which will equalize the assessment for inequalities between counties. The Illinois Department of Revenue will then return the list to the County Clerk.

In December of the tax year all local units of government will levy for tax revenue for the subsequent year. The amount of this levy will be the dollar amount needed for that units’ governmental function in the coming year. The County Tax Extender then divides the levy for each unit of government by the Total Equalized Assessed Evaluation for that unit of government. The resulting number is the tax rate for that unit of government. Each parcel is affected by a number of local units of government, i.e.: School District, Kane County, Fire District, Township, Road District, Villages, etc. A total of the rates of the individual districts is what makes up the tax rate that is then applied to each parcel. This information is then sent to the County Treasurers Office which generates the tax bill by multiplying the Equalized Assessed Value of each parcel by the Total Tax Rate. These bills are sent to the owners by May 1 of the year after the tax year and are payable by June 1 and September 1 of that year.