December 11, 2024

Views: State law grants homestead exemptions to tax-paying tenants

A little-known and rarely publicized provision in Illinois law, in place for more than 44 years, allows most homestead exemptions from real estate taxes to apply to single-family dwellings occupied by tenants, provided that the tenant is responsible for paying the real estate tax.

In 1978, section 19.23-1a was added to the Illinois Revenue Act of 1939, establishing the Homestead Exemption Limited (slangily referred to as the owner-occupied exemption) for eligible homestead properties. This section states that the equalized assessed value of eligible property can be reduced by up to $3,500. The actual reduction is limited to the lesser of $3,500 or the increase in the property’s EAV since 1978. Today, in all Illinois counties except Cook, the primary homestead exemptions have been raised to $6,000, with an additional $5,000 available for taxpayers aged 65 and older.

Initially, eligibility for this exemption was restricted to single-family residences occupied by their owners. However, less than two years later, the definition of “eligible homestead property” was expanded to include leasehold properties where tenants are obligated to pay real estate taxes as part of their monthly payments.

To qualify for this exemption, the property owner and tenant must submit a notarized application annually to the chief county assessment officer, along with a copy of the lease for the applicable calendar year. The lease must state that the tenant is responsible for paying the real estate tax (either directly or through timely rent payments that enable the landlord to cover the taxes). The lease also should include specific language required by statute.

Considering that Illinois homestead exemptions are available for all single-family residences, whether owner-occupied or leased, my question is: why not amend the statute to automatically apply the homestead exemption to all eligible residences? This change would significantly reduce administrative workload and paperwork for both county offices and taxpayers, allowing assessment officials to focus more on fair and equitable property assessments.

• Douglas Farley is the township assessor for Dixon Township in Lee County.