What are preferential assessments and how do they work in Illinois?
Preferential assessments represent a departure from Illinois’ standard property assessment method. In 101 of Illinois’ 102 counties, properties are typically assessed at 33.33% of their fair market value – essentially what they could sell for. However, preferential assessments follow different criteria, offering alternative valuation methods that can result in significant tax savings.
What types of properties qualify for preferential assessments?
Since the mid-1970s, farmland has been the primary category for preferential assessments in Illinois. The assessment process involves complex soil productivity calculations overseen by the Farm Assessment Technical Advisory Board (FATAB). Another significant category is open space, which applies to undeveloped land in high-value areas. This includes corporate campuses like the former McDonald’s headquarters in Oak Brook, golf courses, and similar properties exceeding 10 acres.
What financial benefits do preferential assessments offer?
The financial impact can be substantial. In one case, a two-acre parcel lost its farm classification and saw its annual tax bill surge from $1,200 to $65,000 due to nearby commercial development. For agricultural properties, options include traditional farming, grazing land, animal husbandry, dairy operations, and even beekeeping for agricultural classification.
What are the application requirements and deadlines?
Each preferential assessment category has specific deadlines and requirements. Open space applications typically must be submitted by the end of June. The Illinois Department of Revenue provides specific forms for each type of preferential assessment, which must be submitted to the county’s supervisor of assessments.
How can property owners maintain compliance?
Conservation stewardship plans require a 10-year commitment with specific requirements for managing invasive species and promoting natural ecosystems. Conservation easements offer permanent tax relief but include a 10-year lookback period with 10% interest if the property loses qualification. Regular affidavits confirming continued qualifying use are typically required annually.
What challenges might property owners face?
Assessment decisions can vary significantly between counties, as interpretation of the property tax code differs among assessing officials. Some applications may be denied due to misunderstandings about qualification criteria or purpose of the preferential assessment statutes. Property owners must carefully maintain compliance to avoid losing their preferential status and potentially facing significant tax increases.