‘Senior freeze’ might help you reduce taxes

Q. My neighbor recently told me about something called the senior freeze. He said his real estate tax bill is much lower than his neighbor’s bills because of this. What is the senior freeze and how do I determine if I qualify?

A. There are numerous exemptions available to Illinois residents that effectively reduce one’s real estate tax bill, so long as the property in question is used as one’s principal residence. The first is the homestead exemption. For this exemption, age is not relevant. So long as one resides at a residential property and the property qualifies as his or her principal residence, you qualify for the homestead exemption. The value of the exemption is calculated my multiplying the tax rate associated with your property times a set amount, which is determined by county. That set amount is $10,000 in Cook County and varies between $6,000 and $8,000 for surrounding counties. So, if you reside in Cook County and your tax rate is 8% (see your real estate tax bill), multiply $10,000 by 8% and the homestead exemption will reduce your tax bill by $800.

Another common exemption is the senior citizen exemption. This exemption is in addition to the homestead exemption, however, to qualify, one owner must qualify for the homestead exemption plus, that owner must be 65 years of age or older. If one qualifies, that owner receives an additional exemption of $8,000 (in most local counties) times your tax rate.

Now, to your question, what is the senior freeze? To qualify for the senior freeze, one owner must use the property as their principal residence, be at least 65 years of age AND, have a household income of less than $65,000. A form must be submitted to the county each year you wish to qualify for the senior freeze, substantiating the owner’s income. The form is supported by copies of the owner’s tax returns.

The benefit of the senior freeze exemption is different from the homestead or senior exemptions. Once you qualify for the senior freeze (and presumably remain qualified), the assessed valuation of your property freezes, or remains the same from year to year. The assessed valuation is the most significant driver of real estate tax bills. By freezing the assessed valuation, any increases in the real estate tax bill for a specific property are severely restricted.

Much to the dismay of many seniors, in calculating household income, all household income is used for the calculation, including social security income. Unfortunately, for many seniors, a part-time job and their social security sends them over the $65,000 limit to qualify for the freeze.

There are other exemptions available to homeowners. The Disabled Persons Exemption reduces the assessed valuation by $2,000. The Returning Veterans Homeowners Exemption reduces the assessed valuation of the veteran’s property by $5,000 for the year the veteran returns from active duty and the following year. Finally, the Disabled Veterans Standard Homestead Exemption reduces a property’s assessed valuation by varying amounts, based on the level of the service connected disability. A full tax exemption is possible when the veteran has experienced 70% or greater disability.

For further information, contact your county assessor’s office.

• Send your questions to attorney Tom Resnick, 910 E. Oak St., Lake in the Hills, IL 60156, by email to tom@thomasresnicklaw.com or call (847) 359-8983.