Seniors losing tax benefit of assessment freeze

Tax bills are spiking for thousands of seniors in Kane County thanks to another consequence of falling home values.

Kane County Supervisor of Assessments Mark Armstrong reported Thursday a growing number of senior citizens are calling his office to complain about a miscalculation in their senior citizen assessment freeze exemption.

The exemption freezes the assessed value of a parcel at the date the owner becomes a senior citizen, which is age 65. That frozen value then becomes the base for calculating the taxes due on that parcel.

That results in a tax savings for the owner of that parcel as long as the value of the parcels around it increase. When that happens, the surrounding parcels end up with a larger share of the tax burden than the frozen parcel.

The problem, Armstrong said, is assessed values for homes are not increasing. In fact, they are decreasing. The result is that 7,900 of the 12,890 parcels in Kane County that qualify for the senior freeze now should have an assessed value below the level at which it was frozen.

The way the law works, those seniors will see that new lower assessed value become their new frozen base. But, for one year, because of that loss in assessed value, the tax reduction from their senior freeze will be zero.

“When these seniors first got the freeze, they saw their tax bills dropping by a couple hundred dollars,” Armstrong said. “But as all the property values dropped, boom. At this point they have reached equilibrium with non-freeze parcels and there is no benefit to the senior freeze in the year that happens.”

Armstrong said while that is an unpleasant reality for many seniors who own property, the law isn’t the problem.

“The senior freeze was created to address a specific problem, which was tax increases for seniors due to assessment increases,” Armstrong said. “That is still working exactly the way it was intended to. The thing is, assessment increases are no longer the problem. Taxes are going up because taxing bodies are asking for more money. People were assuming the senior freeze was going to freeze taxes. It never did, but too many people explained it that way.”

There is a silver lining. If seniors can ride out the housing bubble, they will see a benefit in their tax bills once again if and when the assessed values of their neighbors begin to rise. When that happens, properties qualifying for the senior freeze will actually benefit from the even lower assessed value of their property that will be the new frozen base rate for their tax calculations.

“It will actually provider a greater exemption for them than it did in the past,” Armstrong said.

That doesn’t address the immediate problem of there being benefit to the senior freeze. Armstrong said he will provide every county board member with a list of properties in their district suffering from the lost senior freeze benefit in anticipation that those property owners will contact local officials with many questions.