14 Feb Property Tax vs Privilege Tax
Should an investor wish to pay Property Tax vs Privilege Tax is the largest single tax in the state of Illinois. It is a major source of revenue for local governments and their taxing districts. Residents of the State of Illinois currently pay the second-highest property taxes in the nation. This is one of many reasons families are fleeing this state in droves.
Property Tax is an assessment of value, real or implied. A property tax or millage rate is an ad valorem tax on the value of a property. It is usually levied on real estate. The tax is imposed by the governing authority of the jurisdiction in which the property is located. This can be the federal government, a state, a county. geographical region such as a township or a municipality.
A Smarter Way
As investors in Illinois have learned owning real estate is a very expensive proposition. Is there a more cost effective way to manage property in Illinois? Yes there is. Buying and owning mobile homes located on their own lot can be a more cost effective measure.
A Rose by any other Name
Whether you call them Trailers, Mobile Homes, Manufactured Homes or by some other name they share the same characteristics when built. They have road wheels, axels and a hitch to make it easy to move them.
Parks versus open land
When a mobile home is located in a mobile home park they are assessed and taxed as chattel under the “Mobile Home Local Services Tax” (35 ILCS 515/).
Mobile homes and manufactured homes outside of mobile home parks are assessed and taxed as real property, whether or not such mobile homes and manufactured homes are affixed to a permanent foundation. Mobile homes and manufactured homes located on a dealer’s lot for resale purposes or as a temporary office are not subject to this tax.
All mobile or manufactured homes must be registered within the county where they are parked or installed. The owner must intend to live in the mobile home for 2 or more months for the privilege tax to apply.
Mobile homes are taxed at a statutory declining rate based on square footage and the age of the mobile home.
TAX RATE (from 35 ILCS 515/3) The owner of each habitable mobile home shall pay to the County Treasurer of the County in which such mobile home is located an ANNUAL tax computed at the rate shown in the following table:
|Model year and 1st and 2nd year following||15 ¢ per square foot|
|3rd, 4th and 5th years following model year||13.5¢ per square foot|
|6th, 7th and 8th years following model year||12¢ per square foot|
|9th, 10th and 11th years following model year||10.5¢ per square foot|
|12th, 13th, and 14th years following model years||9¢ per square foot|
|15th year following model year and subsequent years||7.5¢ per square foot|
30 Days to Notify
Mobile home owners have 30 days to report the placement of their home to an appropriate assessor. Licensed mobile home park owners have 5 days from entry of any home to file registration with assessors. Non-park homeowners have 30 days from placement for registration with assessors. Registration information includes location, year manufactured, square footage and date of habitation. Failure of anyone to timely file registration may be subjected to Class A misdemeanor.
Mobile home dealers shall within 10 days after any retail sale and delivery of a mobile home, notify the county clerk of the county in which the point of delivery is located of the sale, the name of the purchaser, year of manufacture, the point at which delivery to the purchaser was made, and the serial number and exterior measurements of the mobile home.
Privilege Tax Cycle
The privilege tax cycle is a current year bill initiated by the county on qualifying mobile homes computed by the County Clerk. The taxes may be collected for a partial year. Errors in the bill may be contested within 6 months by the owner through an affidavit. Senior citizens 65 years or older are eligible for a 20% reduction, if applied for. Disabled persons who apply are eligible for a 20% reduction. All bills are due and payable to the Treasurer within 60 days of mailing.
Seizure and Tax Sale
The delinquent privilege tax process begins immediately at the due date. At the due date, non-payment of taxes gives the Treasurer reason for a lien. The original lien expires in 12 months, unless the Treasurer files a lien with the County Clerk. The lien stays effective for 10 years or until paid whichever is first. The lien is on all property of the taxpayer. After 6 months from the due date, the Treasurer may seek court settlement. The court determines terms which may include actual sale of the property.
If any local services tax, or part thereof, imposed by this Act is not paid on or before the due date for such tax, the taxpayer shall be required to pay a penalty of $25 per month, or any portion thereof, not to exceed $100. If such failure to pay such tax is the result of fraud, there shall be added to the tax as a penalty an amount equal to 50% of the deficiency.
Tax Enforcement Act
The Mobile Home Local Services Tax Enforcement Act provides a tax sale process for delinquent mobile home taxes that essentially mirrors the process for delinquent real estate taxes. Instead of a deed, the transfer of ownership under this act is the issuance of a Certificate of Title by the Secretary of State.
Change of Ownership
An operator of a mobile home park licensed under the provisions of the Mobile Home Park Act and any land owner on which an inhabited mobile home is located shall notify the township or county assessor when a change in ownership occurs in a mobile home located in such a park or on such land. The notification shall include the same information for the new owner as that contained in the registration form required of mobile home park operators and mobile home owners.
Permits Required to Move
No mobile home can be moved without a permit (over a mile.) The permit cannot be issued unless the taxes are paid. Permits are issued by the Treasurer and available from the Secretary of State. Failure to follow state statute is a misdemeanor offense.
Circuit Breaker and Senior Citizens Tax Deferral — while property tax is a local tax, the state of Illinois also offers other forms of relief to property taxpayers.
Two longstanding tax relief programs—the “Circuit Breaker” and Senior Citizens Real Estate Tax Deferral—are designed to provide relief to senior citizens. These programs were enacted to assist those on fixed incomes whose property taxes were increasing due to increases in the values of their homes, condominiums or cooperative apartments.
The Benefit Access Program (formerly Circuit Breaker) provides qualified taxpayers and renters with a grant from the state that helps offset property tax costs. Eligibility is determined by age, disability, residency and income. To be eligible for the program, the taxpayer must have a limited income, turn at least 65 years of age during the year the claim is filed; be a widow or widower who turned 63 before the deceased claimant’s death; or be a disabled person as defined in the statute.
The Benefit Access Program Claim must be filed with the State of IllionsDOR within one year after December 31 of the year for which the claim is filed. The amount of the grant is based on the amount of residential property taxes paid and the taxpayer’s income. Renters are authorized to treat 25 percent of rent as real estate taxes. Mobile home local services taxes also qualify. (320 ILCS 25/1 through 25/13)
Disclaimer: This article is Intended to convey general information only and not to provide legal advice or opinions. This information should not be construed as or relied upon for, legal or tax advice in any particular circumstance or situation. This information may not reflect the most current legal developments. Further, this article may contain technical inaccuracies or typographical errors. An attorney should always be contacted for advice on specific legal issues.
As you can see by the disclaimer above, I am not an attorney nor do I portray one on television. Seek competent legal advice. If you do not have a attorney contact George and we will give you a recommendation. www.Skidis.Biz
Good Luck and Good Investing.