A house, Real Estate Property Tax

In Illinois, failure to pay property taxes results in heavy consequences, including interest, fines, liens, tax sales, and in some cases, foreclosure. An Illinois real estate attorney who understands complex real estate laws can help prevent the loss of a home due to unpaid property taxes.

Illinois Property Taxes

Illinois property taxes are levied and collected by local governments to finance various services provided to citizens. The largest portion of property taxes (62 percent) go to Illinois school districts to fund education, while other funds go to public services like police and fire departments, city street maintenance, and public recreational facilities. Illinois property tax assessments are calculated at 33 1/3 percent of the property’s fair market value, except in Cook County where the assessment is calculated at 10 percent. The property tax cycle extends over a two-year period.

Failure to Pay Property Taxes

Unpaid property taxes can result in consequences such as:

  • Compounded interest charges imposed monthly until taxes are paid
  • Monetary penalties, including administrative fees, late fees and collection fees
  • Garnishment of wages, liquid assets, and checking and savings accounts

Tax Liens and Tax Sales

If Illinois property taxes are not paid, a lien will be placed on the property. If taxes remain unpaid for two years, the county has the discretion to foreclose on the lien and auction off the debt at a tax sale where bidders can bid on the tax lien, rather than the property itself. In most Illinois tax sales, the purchase price of the property is usually just the sum of the delinquent taxes.

Illinois tax sales are conducted as county auctions where bids are expressed as decreasing interest percentages, not as a total price for the property. In Illinois, bids at tax sales start at a ceiling of 18 percent and work “down” from there. 85 percent of winning bids are at zero percent. The lowest bidder wins and is granted the lien and a certificate of purchase. If the delinquent taxpayer fails to redeem in the subsequent two years, the buyer takes the property free and clear.

If the property owner files for bankruptcy prior to the tax sale, state courts lose their jurisdiction over the property to order the tax sale. A property tax sale can be set aside by an Illinois real estate attorney in bankruptcy court.