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Demystifying Property Taxes

As a Realtor, the subject I hear most about seems to be property taxes. No one likes them and everyone thinks they are too high, but they arenít going away. From talking with clients about property taxes I have discovered that there are many people that donít understand how property taxes are calculated. I canít tell you how many times I have heard ì I donít want to look at houses in that neighborhood because taxes are too high thereî. Please pay close attention to this: THE TAX RATE IN FREEPORT IS THE SAME ALL OVER FREEPORT!! Shocking isnít it?

Property taxes are based on the assessed value of the property. A $100,000 house in the City of Freeport will have the same tax amount no matter where it is located within the city. Once the market value has been established on January 1 of each year, the assessed value will be 1/3 or 33.33% of the market value for that year. The assessed value is multiplied by that yearís tax rate and that is how your property tax amount is calculated. If the property owner is eligible for certain exemptions ( Owner Occupied, Senior Freeze or Disabled Veteran for example) those exemptions are subtracted from the assessed value. As a result, the property taxes are reduced.

Obviously, there are areas in Freeport where the assessed value of properties will be higher than in other areas, but the assessment determines the amount of the tax. The actual tax rate does not vary from neighborhood to neighborhood. As long as it is in the city, the tax rate is the same. If you are looking to buy an $80,000 house the taxes will be based on the market value of the house, not the street it is on. The taxes the current owner is paying on the property may not be the same amount a new owner will pay on that same property. If the current owner has all the exemptions on their tax bill and you donít qualify for the same exemptions, those will expire and most likely your taxes will be higher. If the homeís assessed value is currently lower than current market value again your taxes will most likely increase to reflect the market value price you are paying for the home.

On the other side, if the home you are purchasing is assessed over current market value, your taxes may actually go down. A property owner has the right to dispute their assessment with the Assessorís Office and can also appeal to the Board of Review if they arenít satisfied with the response. If they still are not satisfied they can appeal all the way to the Illinois Property Tax Appeal Board.

Our property taxes are actually made up of many different taxing bodies such as the School District, Park District, Highland College, Freeport Library and the City and County. If you live in any of the surrounding areas the Stephenson County taxes are calculated in essentially the same way although the taxing bodies will be different.

If you have an escrow account through your lender, your taxes will be collected monthly with your mortgage payment and will be paid by your lender when they are due. If you own your home or are not escrowing taxes with your mortgage payment remember it is your responsibility to pay them when they come due. You pay them in two equal installments usually around the first week in June and September. Taxes are paid in ìarrearsî which means when we get our tax bills this May or June we are actually paying taxes for last year, 2014. If you donít pay your taxes on time a late penalty is added until the tax sale at the end of October. If the taxes are acquired by someone through the tax sale, a lien will be placed on your property which must be paid before you can sell your home.

Hopefully, this has helped to correct some of the misconceptions about property taxes. Instead of just looking at the current taxes on a property you should be checking the assessed value as it compares to current market value to get a truer picture of what the actual taxes will be if you purchase that home. Just think, only 4 more months until those tax bills come again! For more information on property taxes and assessments you can visit the websites of the Stephenson County Treasurer and the Freeport Township Assessor.

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