CHICAGO | Politics and Current Events

[Kngkyle]

Chicago has the lowest taxes of any city in the United States that is worth living in.

[SIGSEGV]

The Tribune is a pro-suburban, anti-city rag. I don't know why I subscribe to it...

[the urban politician]

Originally Posted by LouisVanDerWright

Yeah, even the massive property tax increases aren't as devastating as people catastrophize about. Why? Because our taxes really aren't all that high to begin with unless you are in the suburbs which, as we have discussed ad nauseum, are on the verge of total collapse (this one goes out to you TUP!). For example, my taxes on a six unit building have gone from $3800 to $4800 in three years. That's more than a 25% increase, but it only amounts to $1000 less in my pocket a year, that's less than $100 a month I have to eat or pass on to tenants. Considering I've doubled the rent roll (2 Beds are still only $800 a month after that) since I bought it, it's not really a big deal. Same goes for most of my properties, double digit increases in taxes, but because taxes in the city are so low to begin with it doesn't matter.

I mean I've seen properties worth over $1 million that pay less than $6000 a year in taxes on. In what other city in the US is that a thing? My parents pay like $12,000 a year in Wisconsin for a single family home in a small town that's maybe worth $400k at the very very high end. It's not even in the same realm as what we pay down here.

Thats perhaps been your experience and may reflect your Little Village bent, which has not been hit with the full brunt of property tax increases yet (just wait).

Pilsen has doubled first pass assessments. I have property in north side hoods with taxes pushing $20k per year. $14-16k per year is not unusual for Lincoln Park or Lakeview or Bucktown. My suburban home (a 3300 sf home, 20 years old—trust me it’s nothing special) had a property tax of $12k a few years ago but it’s now up to $16k. Of course I always appeal, but success on this is varied.

Regardless, people are complaining because it’s a real issue. Crains just had an article today ( http://www.chicagobusiness.com/resid...rice-cuts-heat ) about how buyers in the area aren’t motivated to buy homes because of things like ever rising property taxes. It does affect people, and the issue will worsen if JB gets elected and raises State income taxes, which he states he will do.

I think it is naive to ignore the impact these things have on decision making, even for companies like Amazon

[Skyguy_7]

^JB is running on raising taxes...and he'll probably win. How far we've fallen. . .

When I lived in a condo in Chicago, I never realized how well I had it, until I bought a house Park Ridge and got my first property tax bill. Quadruple what I was paying in the city. I was speaking earlier on Illinois' financials as whole. I believe the doom and gloom of the news stories are real because I speak to people and companies who have left or are looking to leave due to the tax burden. I see houses and businesses sprouting up across the borders. Several "Illinois deserters" in Wi have told me that 'literally' all their neighbors have moved from Illinois and commute south to work each day. The suburban struggles are real but perhaps Amazon couldn't care less, as their concerns are with Chicago/the host city alone.

[west-town-brad]

I'm not motivated to buy a bigger or better house... partially because of the property taxes. But then again my place is pretty nice already.

Crains says there have been more $5 Million+ home sales in the Chicago/region this year than ever before... so perhaps if you have the money the taxes don't matter so much...

[SIGSEGV]

Wisconsin taxes aren't any lower than Illinois taxes, so not sure that your neighbors made a good trade.

Indiana taxes are probably lower, but who wants to live in that state?

[sukwoo]

Originally Posted by SIGSEGV

Wisconsin taxes aren't any lower than Illinois taxes, so not sure that your neighbors made a good trade.

Perhaps for now. The pension obligations guarantee that the tax burden in Illinois will go up.

[the urban politician]

Originally Posted by LouisVanDerWright

For example, my taxes on a six unit building have gone from $3800 to $4800 in three years. That's more than a 25% increase, but it only amounts to $1000 less in my pocket a year, that's less than $100 a month I have to eat or pass on to tenants. Considering I've doubled the rent roll (2 Beds are still only $800 a month after that) since I bought it, it's not really a big deal. Same goes for most of my properties, double digit increases in taxes, but because taxes in the city are so low to begin with it doesn't matter. .

^ You're about to get OWNED, especially being active in Little Village where your entire strategy depends on raising rents, if this passes:

http://www.chicagobusiness.com/gover...heats-illinois

[IrishIllini]

Originally Posted by sukwoo

Perhaps for now. The pension obligations guarantee that the tax burden in Illinois will go up.

Those pensions aren't getting paid out as promised. We all know that.

[moorhosj]

Originally Posted by Skyguy_7

Several "Illinois deserters" in Wi have told me that 'literally' all their neighbors have moved from Illinois and commute south to work each day.

Isn't the next logical step in this process an increase in property taxes to pay for all the new schools, roads and services the new residents need?

This is what happened to my relatives who moved from Chicago to Iowa City. They now pay more income tax and their property taxes have increased to make way for all the growth.

[LouisVanDerWright]

Originally Posted by the urban politician

Thats perhaps been your experience and may reflect your Little Village bent, which has not been hit with the full brunt of property tax increases yet (just wait).

Pilsen has doubled first pass assessments. I have property in north side hoods with taxes pushing $20k per year. $14-16k per year is not unusual for Lincoln Park or Lakeview or Bucktown. My suburban home (a 3300 sf home, 20 years old—trust me it’s nothing special) had a property tax of $12k a few years ago but it’s now up to $16k. Of course I always appeal, but success on this is varied.

Regardless, people are complaining because it’s a real issue. Crains just had an article today ( http://www.chicagobusiness.com/resid...rice-cuts-heat ) about how buyers in the area aren’t motivated to buy homes because of things like ever rising property taxes. It does affect people, and the issue will worsen if JB gets elected and raises State income taxes, which he states he will do.

I think it is naive to ignore the impact these things have on decision making, even for companies like Amazon

Except I'm not, I have buildings in Avondale and Logan Square too and have seen about the same increase there. I also see the numbers on other properties I manage and it's all about the same, some properties have gotten clobbered in specific pockets like East Pilsen, yes, but most of the city has seen their taxes rise 25-50% over the past 3 years or so. Don't make the mistake of confusing your anecdotal experience in the hottest pockets of the city with what people are experiencing on average across the area.

Originally Posted by the urban politician

^ You're about to get OWNED, especially being active in Little Village where your entire strategy depends on raising rents, if this passes:

http://www.chicagobusiness.com/gover...heats-illinois

Eh, no I'm not because my strategy doesn't rely on raising rents. I make my money on the value add, I don't even buy buildings with tenants in them to begin with. I make my money grabbing the most trashed buildings where there isn't any rent to control and making them extremely nice. Yes, rising rents would be awesome, but I am creating cashflows that already allow me to pull my entire equity investment back out at completion and still have 25-40% equity in the building and a comfortable DCI so I'm really not reliant on raising the rents further at all. In fact, I probably average 2.5-5% rent increases annually across my entire portfolio because I'd rather keep good tenants who I know pay 100% of the time on time than be a dick and try to squeeze an extra $50 a month out of it.

The big negative of that law for me would be that I would no longer be able to get vacant buildings at a discount. If currently occupied buildings can't raise rents on tenants or force them out to renovate, then everyone will bid up vacant properties because they are the only way to achieve market rents. This will also, of course, encourage landlords to let their properties go to shit so the tenants leave, problem is plenty of tenants don't mind living in absolutely awful conditions.

[aaron38]

You’re all appealing your property taxes, right?
I just moved. House was listed for $350k, got it for $320k. Appealed, got a comp for $280. Previous owner never appealed in 8 years.

[the urban politician]

Originally Posted by aaron38

You’re all appealing your property taxes, right?
I just moved. House was listed for $350k, got it for $320k. Appealed, got a comp for $280. Previous owner never appealed in 8 years.

I have a rolling appeal of property taxes that is ongoing.

The city has long been arbitrary about property taxes. Two neighbors can have similar properties but very different taxes. It’s almost as if you need to prove that your taxes are too high, as opposed to having a fairer system. It’s set up for corruption—I know just last year I paid thousands to my property tax appeal attorney. He in turn pays up to the campaign of the present Cook County Assessor. It’s how this whole system works.

I recommend you guys look up California’s Prop 13 which was passed in 1978. California was in the same boat as Illinois until this was enacted. Property taxes were substantially reduced in turn for a bump in the State income tax. Ultimately I would like to see something like that pass here—it ends the uncertainty, brings uniformity, and eliminates perverse incentives for corruption.

I own a rental home with farmland of about an acre in California and my yearly property tax bill is under $1000 per year! A comparable property in Chicago would easily have an over $5000 property tax bill

[LouisVanDerWright]

I've actually never appealed taxes on any of my properties, I just don't own anything that's highly taxed. My first building started at $3200 and now pays $4400, that's since 2011. Most of that increase happened in the past three years as a result of Rahms reforms.

Now I'm buying a building that's being charged over $7000 a year when a way nicer, totally rebuilt in the last 2 years, building I own across the street pays only $5600. This building is more than 50% abandoned and in terrible shape. Yet I'm paying 20% less for a larger nicer building that's 100% occupiable. Go figure?

This new building will be the first property I even challenge and I'm only doing I because clearly something is wrong in their system if they have this thing being taxed so highly.

[the urban politician]

^ Well, I think that’s exactly the argument about the property tax system that goes unmentioned. It’s not just them being too high, it’s also about their arbitrary nature. There often is no rhyme or reason, and it makes is hard for appraisers, buyers, sellers, and lenders to determine what the hell a property’s value is.

FYI, I highly recommend you begin appealing—it’s just a part of the business. In my gut rehabs I appealed and saved thousands on the basis of my property being vacant. Vacant properties are taxed WAY lower, and to qualify you need less than a certain occupancy (40% I believe). If you don’t appeal it’s money you’re leaving on the table. Most lawyers will do all the work, they keep 33% of what they save you. If you don’t win the appeal, you don’t pay the lawyer anything, so there’s no reason not to do it with the current system we have.

[emathias]

Originally Posted by IrishIllini

Those pensions aren't getting paid out as promised. We all know that.

I don't know that. And I wouldn't necessarily support that, even as a private citizen who has never had a government job. People took jobs based on promised compensation; they should be paid. If you, as a citizen, voted for people who didn't fund promises to workers, and then also refuse to pay as promised, you're a psychopath.

[emathias]

Originally Posted by west-town-brad

I'm not motivated to buy a bigger or better house... partially because of the property taxes. But then again my place is pretty nice already.

Crains says there have been more $5 Million+ home sales in the Chicago/region this year than ever before... so perhaps if you have the money the taxes don't matter so much...

Because of Illinois's flat income tax, the more money you earn, the better deal Illinois is. If you're lower income, you save a lot in tax moving even to California. If you're high income, you almost always pay more taxes in progressively taxed States.

From a policy standpoint, I support progressive taxes. From a long-term strategy standpoint, keeping a flat tax and upping the overall rate might be better for Illinois so it keeps high income residents.

[IrishIllini]

Originally Posted by emathias

I don't know that. And I wouldn't necessarily support that, even as a private citizen who has never had a government job. People took jobs based on promised compensation; they should be paid. If you, as a citizen, voted for people who didn't fund promises to workers, and then also refuse to pay as promised, you're a psychopath.

Politically I agree, but I don't know where the funds will find the money to fund the pensions.

[emathias]

Originally Posted by IrishIllini

Politically I agree, but I don't know where the funds will find the money to fund the pensions.

It won't be pleasant, but parts of the budget that aren't constitutionally protected will ultimately be cut, and/or taxes will rise until they can meet the burden.

[bnk]

https://www.chicagobusiness.com/greg...how-bad-damage

Pritzker's toilet scandal: Who leaked the report—and how bad is the damage?
The Democratic gubernatorial candidate is likely to survive a watchdog report that he gained from "a scheme to defraud" taxpayers. But the impact could last.


Greg Hinz

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