A new state law requires Cook County homeowners to repay savings on property tax bills that they should not have received. Property owners who erroneously received homeowner, senior citizen, or other tax exemptions have until December 31 to repay the tax savings from such exemptions without interest and penalty. Those who wait until January 1, 2014 will have to include interest and a penalty when repaying unwarranted tax savings.

“The Homeowner Exemption, the Senior Citizen Exemption and the Senior Freeze Exemption are the most popular of the money-saving tax exemptions available to homeowners,” said Assessor Weyrick. “My office has always been happy to help owner-occupants apply for these valuable exemptions, and will continue to do so.”

Illinois law makes it clear that tax exemptions are available only on a homeowner’s principal residence. However, a significant number of rental properties, investment properties, and second homes have been receiving exemptions that they are not entitled to. For example, a study by the Hanover Township Assessor’s office of two villages in northwest suburban Cook County indicated that 15% of rental properties were improperly receiving homeowner exemptions.

“Under our property tax system, whenever one property receives an exemption it is not entitled to, all other property owners have to pay a little more to make up for the erroneous exemption,” Assessor Weyrick said. “This is unfair.”

In the past, little could be done about property owners who received exemptions they were not entitled to. The new state law, however, provides a procedure that will require those who have received erroneous exemptions to repay them, while discouraging others from obtaining erroneous exemptions in the first place.

Who is affected by the new law? People who own more than one residential property, and people who own properties where senior citizens have recently lived, should pay attention to the new law. Individuals who only own one property—the home where they live—likely will not be affected by the new law.

A. People who own more than one residential property. Individuals who own two or more residential properties can receive a homeowner exemption only on their principal residence. In most circumstances, property owners will have to repay the savings obtained from erroneous tax exemptions on other properties that they own.

Although some people have gamed the system to get property tax breaks they are not entitled to, other people may be receiving multiple exemptions without realizing it. This is because the Homeowner Exemption, once initially applied for, is typically renewed automatically until the property is sold. If someone bought and moved into a home or condominium, and then moved out without selling it, the property likely is still receiving the Homeowner Exemption. Since the property is no longer owner-occupied, however, it is no longer eligible for the exemption.

B. People who own homes that were once occupied by Senior Citizens. A threshold requirement of both the Senior Citizen Exemption and the Senior Freeze Exemption is that one of the property’s owner-occupants must be sixty-five years of age or older. If a senior citizen no longer lives on the property, the property typically is no longer eligible for either senior exemption.

There are circumstances where a property may be eligible for a senior exemption when a senior does not live on the property. Seniors who moved from their house to live in a nursing home, the surviving spouses of senior citizens, and people who recently purchased property from seniors, may be eligible for one or both senior exemptions for a period of time. Assessor Weyrick urges those with questions about the eligibility rules for senior exemptions to call her office.

Determining if Taxpayers are in Compliance with the Law. Under the law, most property owners can be made to repay the savings from erroneous tax exemptions going back three years. But property owners with a significant number of erroneous exemptions can be liable for erroneous exemptions for as many as six prior years.

Taxpayers curious about whether they are in compliance with the law will have to do some research on the exemptions they received in prior years. To get the necessary information, they can either review second installment tax bills of all properties they own from prior years, look at the ‘Exemption’ sections of the web sites of either the Cook County Assessor or the Cook County Treasurer, call the Cook County Assessor’s office, or call the Lyons Township Assessor’s office. These information sources will allow property owners to determine how many exemptions they have been receiving, and whether they are in compliance with the law.

Assessor Weyrick urges anyone with questions about the new law to call her office, 708-482-8300.

“My office can help taxpayers determine whether they have any erroneous exemptions. We can also offer advice and assistance on how to repay the exemptions, and how to insure that property owners do not receive erroneous tax exemptions in the future,” said Weyrick