ChitownLiving | Chicago Real Estate + Life

This is an especially important issue to address as taxes have the possibility of costing the purchaser thousands of dollars if a proper proration method is not agreed upon between the parties.  Taxes in Illinois are paid a year in arrears which means that in 2006, property owners paid the 2005 tax bill and in 2007, unit owners will pay the 2006 tax bill.  Often times, Developer’s contracts state that the developer will pay all taxes for the years subsequent to closing.  If the contract does not state this, it may be wise to make this request.  Real estate taxes for New Construction building can be a bit confusing.  For example, a three-flat condominium that was built 5 years ago most likely has 3 individual tax ID numbers which means that each of the unit owners receives their very own tax bill.  A new construction three-flat is a little different.  It usually takes a period of time until the County Assessor’s office assigns individual tax id numbers to the new units.  Thus, when a tax bill comes out, it is for the entire building as opposed to the individual units.  The unit owners will have to get together and determine each unit’s proportionate tax responsibility which is usually based on the percentage interest in the common elements multiplied by the tax bill. It is important to determine how the new construction is being assessed.  For example, if the area is being assessed as vacant land, there is a possibility that the assessed value will go up either before or after closing which will amount to a higher tax burden.  If the Purchaser does not perform his/her due diligence, he/she may stand in the position of receiving a tax credit at closing for an amount far less than what he/she actually deserves. Prior New Construction Series Posts

• Purchaser Litigation
• Appraisal Contingency
• Closing
• Warranty