Feb 09, 2017

Will Governor Rauner pay my mother’s real estate taxes?

Q: My mother’s widowed neighbor told her that Governor Rauner pays his real estate taxes. (Frankly, I think he’s been smoking too many pine cone seeds.) Can you please confirm my opinion of the mental state of my mother’s neighbor?

A: Not only is your mother’s neighbor not mentally challenged, but he is correct and I suggest that your mother bake him a pie for informing her of a valuable State of Illinois program designed to aid senior citizens. The law in question is identified as the Senior Citizens Real Estate Tax Deferral Act. It is a law which has had little publicity and the percentage of eligible participants is very low. Generally, the law provides that senior citizens may defer the payment of their real estate taxes on their home until the death of the homeowner or the sale of the home by the homeowner. To be eligible for the benefits of the statute, the following requirements must be satisfied:

  1.  the homeowner must be at least 65 years of age;
  2.  the household annual income cannot exceed $55,000;
  3.  the homeowner must have procured fire and casualty insurance; and
  4.  there cannot be any outstanding property taxes or special assessments.

If the statutory conditions are satisfied, the State of Illinois will then pay the real estate taxes in an amount not in excess of $5,000 per year. Accordingly, in the event the real estate taxes for a given year are $6,000, the State of Illinois will pay $5,000 and the homeowner will be responsible for payment of the remaining $1,000.

The amount of real estate taxes paid by the State of Illinois will incur interest at a rate of 6 percent per annum. The amount of the tax paid by the State of Illinois and the accrued interest is payable upon the earlier to occur of the death of the homeowner or when the homeowner sells the home.

Please note that there are other conditions which need to be satisfied. For example, the sum of all real estate taxes paid by the State of Illinois may not exceed 80 percent of the homeowner’s equity in the property. Accordingly, if the home in question has a fair market value of $300,000 and the mortgage balance affecting the property is $40,000, then the total amount of real estate taxes which the State of Illinois would pay cannot exceed $208,000.

The real estate attorneys at Chuhak & Tecson would be pleased to discuss any questions which you may have regarding the statute and whether you or a relative may be eligible to participate in the program.

P.S. Your mother may want to consider adding some pine cone seeds to the pie.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by: Arnold E. Karolewski, Principal

This alert originally appeared in the Winter 2017 Real Estate Focus newsletter.