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from Local Attorney, Michael H. Wasserman

Monday, January 28, 2008

Even PROPERTY TAX RELIEF FOR (most) HOMEOWNERS !

All Illinois homeowners will be eligible for at least some property tax relief with regard to their qualifying principal residences, as part a new law, passed in October, 2007.

The GENERAL HOMESTEAD Exemption is granted to properties that are the owners’ principal residence. The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bills (together with the local tax rate and state equalization factors).

Effective with the 2008 tax year (payable in 2009) the maximum homestead exemption will rise from $5,000 to $5,500. In 2009 (payable in 2010) the maximum will increase to $6,000.

PROPERTY TAX RELIEF FOR SENIORS TOO !

Illinois homeowners who are also SENIOR CITIZENS will be eligible for at least some property tax relief with regard to their qualifying principal residences, as part a new law, passed in October, 2007.

The SENIOR CITIZEN Homestead Exemption, granted to persons that are 65 years old or older for their principal residence, will increase from $3,500 to $4,000 effective with the 2008 tax year (payable in 2009).

The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bills (together with the local tax rate and state equalization factors).

The SENIOR CITIZEN ASSESSMENT FREEZE Exemption freezes a property’s EAV, provided that the maximum household income does not exceed a stated amount. That income level increases from $50,000 to $55,000, effective with the 2008 tax year (payable in 2009).

The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bills (together with the local tax rate and state equalization factors).

PROPERTY TAX RELIEF FOR VETERANS and the DISABLED PERSONS

More Illinois veterans and disabled persons will be eligible for property tax relief as part a new law, passed in October, 2007.

Starting with 2007 property tax bills (payable in 2008) the following NEW tax exemptions will be available to qualifying homeowners:

The RETURNING VETERANS Homestead Exemption, affords a one time $5,000 reduction of a property’s “Equalized Assessed Value” (EAV) to veterans returning to Illinois from active duty in an armed conflict involving the armed forces of the United States.

The DISABLED PERSONS Homestead Exemption, affords a $2,000 reduction in EAV to qualifying property owned by a disabled person. The exemption may be taken every year, provided an annual application is filed with the County.

The DISABLED VETEREANS’ STANDARD Homestead Exemption will also reduce EAV to qualifying properties owned by vetereans who suffered service connected disabilities (certified by the US Department of Veterans’ Affairs) and for which annaial applications are filed with the County. Veterans with disabilities rated above 75% may received a $5,000 reduction of EAV. Disabilities between 50% and 75% qualify for a $2,500 reduction.

The previously enacted DISABLED VETERANS HOMESTEAD EXEMPTION that provides up to $70,000 EAV reduction for federally approved specially adapted hosing is still available through local VA offices.

The only bad news is that a person can only claim one of these special expemtions for Disability per year.

(Some) new Mortgage Woes for Anyone in the New Contruction Mortgage Market

As many bad experiences as I am subjected to when working with inept or indifferent mortgage brokers, I really do appreciate the good ones. One such Mortgage Broker is Richard Cohen of Professional Mortgage Partners. I have been fortunate to have worked with Richard several times over the last few years. Aside from being a customer-oriented and hard working lending professional, he is a nice guy and a good writer.

Richard recently described the currently mortgage for buyers and sellers of new construction condominiums - (stop me if you've heard this before) - things are getting tougher.

He writes:

In the last several years, buyers of new condo projects had little difficulty in obtaining loans. It didn't matter if the condo was warrantable (in essence: certified by the lender that the condo meets Fannie Mae/Freddie Mac condo guidelines) or non-warrantable (not certified to the guidelines). A buyer could be the first one in the complex and have no issues.

Things have changed in the last 30 days. Because of the losses in the market, Fannie and Freddie have gone back to the old days. For new construction, depending on the project, loan, and other factors, a buyer will probably have to wait until the appraisal has been performed,a condo questionnaire has been completed, and, in some cases, the lender has reviewed other documents such as the condo budget, decs and bylaws, etc.

It is going to be more difficult and time-consuming to fully approve condos. It's not the loans, but the condos themselves.

Here's my two cents how to work with this:

  1. Buyers should ask their loan officers if they are aware of the changes. If they get a blank stare, find another lender.
  2. Agents should make sure that they have the various docs ready to send to the lender for review.
  3. Both buying and listing agents should make sure that the lender can do both warrantable and non-warrantable condos.
  4. Listing agents and developers might want to have a preferred lender who can have the entire project warranted so that prospective buyers have a guaranteed lender.
All too often, I see "lesser" lenders who neither understand these market changes, or simply choose not to adapt or are slow to change when they occur wait. Such lenders tend to wait until week of closing to begin the process of trying to secure condo project approval. Inevitably, delays ensue, frustrations rise-up, and good will is lost. In the worst cases, lender delays have cost buyer's money in the form of delayed-closing penalties or the loss of earnest money.

I've long counseled clients to make sure they are working with knowledgeable, experienced, aggressive lenders, and to start the mortgage application process as early as possible on the timeline of a real estate transaction. This is just another example of why I do so.
Chicago Attorney Peter Olson operates a general civil practice not unlike my own. He also blogs actively on Chicago area real estate matters at Closing Real Estate in Chicago.

I don't know him personally yet, but I owe him some modest debt of gratitude for inspiring me to start this blawg. I have been looking at Peter's musings and alerts for some time now. If you have not seen it yet, you might probably ought to.

Now that I have praised him, lets all agree that he may have questionable tastes in regard to reviews of other blogs...

(thanks Peter, its nice to get noticed)