Homestead Exemptions and Rental Property in Illinois

Currently, homeowners can claim a homestead exemption, lowering their taxes on their primary residence.  Many times, tenants renting a single-family home can also qualify for a homestead exemption if they are responsible for paying the real estate taxes on the home; in most counties, the tenant’s lease must state that a portion of the monthly rent is used toward taxes.

Unfortunately, there are people claiming homestead exemptions on homes they don’t live in and other investment properties.  As a result, proposed legislation is pending which would allow the county to eliminate the homestead exemption on a home that previously qualified for the exemption, if that home was not, in fact, owner-occupied.  Counties could also insist that the owners of such properties refund exemptions that they previously received.  Counties could even assess fines against such property-owners.  Moreover, there is a move towards eliminating the loophole for single-family residences that are rented.

Understandably, landlords are up in arms.  Their primary argument is that the various county assessors will not implement and enforce any new laws uniformly.  Some landlords may face heavy fines, while others may get away with a slap on the wrist.  Moreover, the new laws could make real estate ownership even less affordable for many landlords, especially those who are barely making it right now.

Supporters of the legislation, on the other hand, state that landlords are essentially cheating and are improperly benefiting from the homestead exemption on properties in addition to their primary residence.  They feel that this defeats the purpose of the homestead exemption, and that it’s just not fair.

It remains to be seen if the legislation gets passed, but landlords should be aware that things may change very soon!