It’s possible you’re one of those people whose got it all figured out. Your budget and bills are on autopilot, and no curveball is going to mess that up. Until this year. 

With Oak Park taxpayers poised to realize the effect of the triennial reassessment and already feeling the impact of School District 97’s successful referendum, not to mention the still unfolding details in the federal tax bill, property taxes are bound to be provide a bit of uncertainty even for the best planners among us. 

While the only two certainties in life may be death and taxes, the latter is generating plenty of questions in Oak Park.

Gagliardo Realty agent Jenny Ruland, an Oak Park resident since 2006, notes that buyers in Oak Park already wrap the community’s tax burden into their decision to buy in Oak Park. 

“People over time become more seasoned homeowners,” Ruland says of buyers moving within the community. “If they move into a different home, they are prepared and look at the taxes. Even with new buyers, the taxes on a home play into what they can afford monthly.”

Ruland says that most buyers who work with mortgage brokers consider the total picture. 

“Principal payments, interest, taxes and insurance, or PITI, all of this is considered your monthly payment,” she said. “The rule of thumb is that this should equal roughly 28 percent or less of your monthly take-home.”

Ruland has heard chatter outside of Oak Park that the village is known for being a high-tax community, but she says that the village is still desirable for its proximity to the city, schools, Metra, CTA and parks. 

She has seen clients leave the village due to expenses, including some who chose to base their families elsewhere because Oak Park had become too costly. Others are changing their approach to local investment. 

“Some owned condos as investment properties,” Ruland said. “With taxes increasing 20 percent in the past two years on condos, it doesn’t make sense as an investment property because you can’t always cover that increase with rent.”

For Oak Park resident and Baird and Warner broker-associate Mary Carlin, who grew up in the village, “Oak Park has always been known as a village with really good schools and higher taxes. It feels like every time there’s a triennial reassessment, everyone freaks out. We all know it’s expensive here, but we all also vote for these referendums.”

With her clients, she sees some frustration that there is no rhyme or reason to Oak Park’s property taxes. 

“For a first-time buyer looking in the $350,000 to $500,000 range, the taxes vary tremendously,” Carlin said. “They could be $7,000 to $15,000. The saddest thing about it is that the old adage about buying the yucky house on the best block doesn’t work very well here. You’ll get assessed based on neighboring properties.”

Noting that buyers like the Oak Park area because it says something “about who you are and what you believe in,” Carlin advises her clients to factor property taxes into the purchasing decision. 

She creates reports for buyers who are considering homes where taxes are higher than the neighborhood norm and has leveraged that tax number in getting the house for a lower price. 

Carlin also recommends that clients consider total costs inclusive of taxes. 

“I’ve had people say that if it’s an Oak Park house they’ll go up to $500,000; if it’s elsewhere, they may go higher,” she said. “People are often surprised to learn that Oak Park’s tax rate is higher than River Forest’s. If your budget is around $600,000, maybe you’ll look at River Forest and get a bigger lot and lower taxes and travel to Oak Park to use the amenities.”

Reaching a tipping point?

John Lawrence, broker/owner of Weichert Realty-Nickel Group says that he often speaks locally about the real estate market and has begun to warn that Oak Park is close to the tipping point in terms of taxes. 

“People who are voting for these referendums are starting to realize this,” Lawrence said.

For Ruland, there is a concern that rising property taxes might have a negative effect on the town that she loves. 

“Oak Park is such a great, richly diverse community, and that also includes socio-economic diversity. We want to keep that,” Ruland said. “As a community, we should try to get involved and not be behind the eight ball on this.”

Her concerns are echoed by the hundreds of Oak Park residents who have joined the Facebook group Oak Park Property Tax Watch. Founded by Gregory Francis in late 2017, the grassroots group held their first face-to-face meeting on Jan. 11.

Trustees Deno Andrews and Dan Moroney are members of the group and comment on the village’s role in local taxes. For Moroney, it is part of his campaign promise. 

“The need to intentionally lower the rate of tax increases is about ensuring the economic sustainability of our community,” Moroney said. “I believe that if our taxing districts and elected officials are not able to get this under control, many of the core values of Oak Park will be eroded.”

Lawrence said that as desirable as Oak Park is, the total tax levy increase since 1999 brings challenges. 

“The levy in Oak Park over the last few years has gone up significantly. People are starting to really look at that now,” Lawrence said.  

Since 1999, taxes levied – combining all taxing bodies that serve the village — on Oak Park homeowners have increased 120 percent, from 95.8 million in 1999 to $211.5 billion in 2017, according to the Cook County Clerk’s Office. At the same time, the rate of inflation has increased about 40 percent.

At the same time, the median market value of a home in Oak Park has increased since 2001 by about 53 percent, from $295,000 to $451,000, though anyone who bought a home around the time of the real estate collapse hasn’t felt the benefit of that long-term increase.

Oak Park home values dropped sharply, from a median high sale price of $470,000 in 2007 to $368,000 in 2011. Prices have slowly recovered since then.

“We have some who decide it’s worth it,” Lawrence said. “Others have a $300,000 house and $12,000 taxes, and it won’t sell. You can’t reduce the price enough to make the numbers work from a lending standpoint.”

Federal impact still unclear 

Recent changes to federal tax law, which limit the deduction for state and local taxes (SALT) to $10,000, will have some effect on high-property tax localities and local real estate, but it is not yet clear what that impact will be. 

Lawrence said that the National Association of Realtors lobbied hard to make the first draft of the bill more palatable, retaining at least some deduction for SALT and keeping the mortgage interest deduction, albeit with a cap on the mortgage amount of $750,000. 

For Lawrence, these changes will hit households differently depending on their individual circumstances, including the amount of state income tax they owe.

He said that the doubling of the standard deduction for married couples to $24,000 might mitigate some of the impact of the lowering of the SALT deduction, and says that accountants will be better able to determine what the impact is for individual circumstances.

Oak Park Township Assessor Ali ElSaffar agrees that the overall impact of the tax bill depends on a number of factors. 

“I suspect that a lot of people who were itemizing before might not anymore with the changes in the standard deduction,” ElSaffar said.

ElSaffar said that 73 percent of single-family homes in Oak Park had property tax bills greater than $10,000 last year, along with 52 percent of townhomes, 9 percent of condos and 76 percent of two- to six-flat buildings.

For him, the overall tax impact of the federal law depends on how many people are paying more than the $24,000 standard deduction in property tax, mortgage interest, state income taxes and charitable deductions. He predicts the higher-end homeowners might feel the pinch.

“Sometimes, there are unintended consequences of changes in the law,” ElSaffar said. “With the limited deduction of property taxes, the limiting of the mortgage interest deduction and the change in residency for capital gains to five years from two years, all of these things put together might eventually effect pricing and demand for million dollar homes.”

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