Can someone explain IL taxes to me in simple terms? (Chicago: sales, real estate)

[team_evans]

Hello,

I've been searching all over the internet trying to find simple answers to this question, to no avail.

How much of a tax burden do we need to be prepared for if we move to Illinois?

I've asked before about where to live if my husband accepted a job at Great Lakes Naval Station, and I got great information from y'all and have that pretty much figured it out. (Gurnee would be our first choice, but we'd also househunt in Lake Villa, Lindenhurst, Antioch and Grayslake.)

Now we're trying to figure out whether we can afford to live there. The problem is that while my husband would be making decent money--we think he'd be offered $80-85K--we can only squeeze about $60K profit out of the house we now own. (Housing downturn, plus needed remodelling and repairs before we could put it on the market, plus we bought it with a 3% down FHA loan so didn't have that much equity to start with.) So we're worried about keeping our payment (P+I+taxes and insurance into escrow acct) to 25-28% of his monthly income, which is quite a challenge with what Zillow gives as the property taxes for properties in your corner of the world.

So can anyone tell me:

*Are the amounts that Zillow gives for a particular address the actual amount due every year, or is there some kind of rebate scheme or something? Do people truly pay $6-7K a year on a $250K house?

*Why are property taxes so high, and why do they vary so much? I looked at one $250K house and the property tax was $7750, and another in the same town at nearly the same price point was $5300. What gives?

*What is the state income tax rate? What do I need to know in estimating how much we're going to have to pay the great state of Illinois for the priviledge of earning a living?

*What is the sales tax rate? They even tax unprepared food, right? I know it varies from place to place, but ballpark for the areas I mentioned is ok.

*What other misc taxes do we have to worry about? Are their real estate transfer taxes? Big special taxes on vehicles (we'll be buying him a new car when/if we get there)?

I'm not an anti-tax fanatic and I know to get quality communities you have to pay for them--I'm just trying to figure out whether we can live decently on what he makes (due to small kids at home and the cost of daycare I'm not working for a few years yet) while paying 1)very high property taxes; 2)state income tax and 3) sales tax.

And in Washington where we come from there's no state income tax, the property tax on a $250K house is $2K, and the sales tax is about 8% depending on locality. So you could say we're not accustomed to a heavy tax burden!

Thank you for any ballpark estimates you can give for how much we'd have to be prepared to pay.

[myrc60]

I went to zillow and looked up my old house in Bridgeview and it gave me stats for the home next door. I would be careful not to put too much trust in their figures. I will look more at another time to see if the parcel # and such all right.

I also checked a few other homes I know about and several have the wrong home pictured. Good luck using zillow.

[Drover]

Here's the simplest way to explain IL taxes, especially in the Chicago area:

1) You have money.

2) The government wants lots of your money.

3) Therefore, the government takes lots of your money.


To answer your questions more specifically:

1) Don't even try to figure out the property tax situation. And don't trust whatever has been quoted to you either by the real estate agent. In a lot of places, the valuation resets at whatever price you pay effective immediately, meaning you're liable to pay more than the previous owner did. Sort that out with the relevant taxing bodies before signing on the dotted line.

Income tax is a flat 3% on your federal AGI with a $2,000 per-person exemption. Other exemptions are few and far between.

Sales tax ranges anywhere from 6.75% to 10.25% depending on where you live. Most groceries are taxed at 2%.

Speaking of which, you will pay anywhere from 6.75% to 10.25% sales tax on a new or recent used car, depending on where you live. After that there's a sliding-scale car-purchase tax that bottoms out at $25 for any car that is older than about 10 years old and valued at less than $15,000, or something like that. But if you buy new, you're paying the full applicable sales tax.

[dherkes]

You are quite right to ask these questions. The fact that it "seems" confusing, and the answers are not forthcoming should be a clue as to what might be waiting for you. Frankly this is a very poor time to buy real estate. I am not in the market at the moment, but were I, I would wait and see where the important fixed costs, like taxes and transportation, might be headed.

[sgresident]

depending on where you choose to live in illinois, there are different rates. the majority of a property tax bill(approx. 60%) goes to the school district. There are numerous layers of taxes here. school, county, municipal, township, library, etc. then there are the pensions etc. that apply to all of those workers in those layers of government. the state income tax is flat right now at around 3%. sales tax varies based on where you live. Since I live in the collar counties of chicago, i just had sales tax added to fund the CTA, however, I have no access to it!!!!! sales tax on food and medicine is 1%. If a city is home rule (over 25,000) they can add real estate transfer taxes, restaurant taxes, hotel taxes, entertainment taxes etc. those that are not home rule, can't do that unless a referendum is passed by the residents to become home rule.
hope this helps a little.

[studedude]

Nobody has answered why taxes are so high. The fact is that Illinois politicians are so crooked they have to be screwed into the ground when they die. While living your money goes to their defense fund.

[myrc60]

Originally Posted by studedude

Nobody has answered why taxes are so high. The fact is that Illinois politicians are so crooked they have to be screwed into the ground when they die. While living your money goes to their defense fund.

Yup yup!

Taxes in Illinois are a big reason we left and then corruption i would say is a close 2nd.

Another way you are taxed is through vehicle stickers. Varies from one town to another and can be quite stiff if in Chicago proper. In Bridgeview we paid $15 I think.

[tcs1366]

Our vehicle stickers are only a buck. the village absorbs the cost... though our taxes are quite high at 1.7%

it does seem no matter where you live -- you are going to get hit with taxes one way or another. Ya just can't win.

[gardener34]

Oh yeah, and don't forget all the fuel taxes. They are I believe the highest in the nation. NY is a close second/first I think I read once. Thing is, every little town and county has to take their percentage on the gas. 2 cents here and there per gallon. And some towns have "entertainment taxes" like schaumburg among others.

Yes, IL is very tax heavy in my opinion. And your best bet is going directly to each county's own tax revenue sites and getting the tax info right from there. Or the town's website.

Also: Just because your property values did not go up, does not mean your property taxes do not go up. Ours has gone up every year since we moved here to Kane county. (65% to the schools) And when you move in, the next year, due to transfer of ownership, yours will likely go up. So be prepared for all this when you move here.

[STL Mom]

I'm also moving to the Chicago area from out of state. I was told that the variations in real estate taxes are because the tax rules are pages and pages of complicated local formulas, and that many people make a hobby of trying to get their tax rate adjusted.
Apparently the value of your property, the square footage of the house, the square footage of the lot, and the year it was built and the year it last sold are all part of the formula that makes taxes twice as high on one house than on another that is the same price. And, if you are shopping for a house now they are telling you the 2006 taxes, because the 2007 taxes won't be billed until June 2008. When you buy, your lawyer will work out some kind of a tax escrow with the seller so you won't have to pay their taxes for last year. And, as someone else said, the 2008 taxes (billed in 2009) will probably go up because you bought it.
You can ask your realtor which towns have a transfer tax - our realtor gave us a list. And we had to pay the transfer tax upfront, before closing, so make sure you budget for that. Good luck!