Who Pays Property Taxes at Closing in Illinois?
When it comes to buying or selling a property in Illinois, one important aspect to consider is property taxes. Property taxes are an essential part of homeownership, and understanding who pays them at closing is crucial. In this article, we will explore the rules and regulations regarding property taxes in Illinois and answer frequently asked questions about this topic.
Property Taxes in Illinois:
Property taxes in Illinois are levied by local governments to fund various public services and facilities like schools, libraries, parks, and public infrastructure. These taxes are based on the assessed value of the property and are typically paid annually by the property owner.
Who Pays Property Taxes at Closing?
In Illinois, property taxes are typically divided between the buyer and the seller at the closing. The exact division is based on the local tax cycle and can vary from county to county. The division is commonly done on a pro-rata basis, meaning the buyer pays for the portion of the year they will own the property, and the seller pays for the portion of the year they owned the property.
The buyer’s portion of property taxes is usually credited to them at closing, and this amount is held in an escrow account by the lender. The lender then uses this money to pay the property taxes on behalf of the buyer when they become due.
FAQs about Property Taxes at Closing in Illinois:
Q: How are property taxes calculated in Illinois?
A: Property taxes in Illinois are calculated based on the assessed value of the property and the tax rate in the specific jurisdiction. The assessed value is determined by the county assessor’s office, which evaluates the property periodically.
Q: How is the pro-rata division of property taxes determined?
A: The pro-rata division of property taxes is usually determined by the local tax cycle. For example, if the tax cycle in a specific county starts on January 1st, and the closing occurs on June 30th, the buyer will typically pay property taxes for the second half of the year, and the seller will pay for the first half.
Q: What happens if property taxes are unpaid at closing?
A: If property taxes are unpaid at closing, the buyer’s lender will require the seller to pay them before the sale can proceed. The unpaid taxes can become a lien on the property, which can affect the buyer’s ability to obtain clear title.
Q: Can property tax exemptions transfer to the new owner?
A: In Illinois, property tax exemptions do not automatically transfer to the new owner. The new owner must apply for the exemptions themselves to receive the tax benefits associated with them.
Q: Can property tax assessments increase after closing?
A: Yes, property tax assessments can increase after closing. Assessments are done periodically by the county assessor’s office, and if the assessed value of the property increases, the property taxes will likely increase as well.
Q: What happens to the escrow account after closing?
A: After closing, the escrow account established for property taxes will continue to be maintained by the buyer’s lender. The lender will use the funds in the account to pay property taxes on behalf of the buyer when they become due.
In conclusion, property taxes play a significant role in real estate transactions in Illinois. Understanding who pays property taxes at closing is crucial for both buyers and sellers. The pro-rata division of property taxes ensures a fair distribution of the tax burden between the parties involved. It is important to consult with a real estate professional or attorney to navigate the complexities of property taxes in Illinois and ensure a smooth closing process.