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What Does Tax Proration Mean for Chicago Buyers and Sellers?
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Kevin Mitrick, an attorney with Spain, Spain, & Varnet P.C., focuses primarily on the representation of buyer and sellers in real estate transactions. Today, he joins me to answer the question, “What is a tax proration?”
In Cook County, taxes are billed bi-annually and based off the previous year. The first installment is always 55% of the previous year's full tax bill. When a transaction closes, there will be a period of taxes that have not been paid yet, generally from the day the last bill was issued through the day of closing. At times, that can be a lengthy period. The goal is to come up with a calculation that both the buyer and seller agree with.
Although that can be difficult, buyers want to maximize the tax credit while sellers want to minimize the tax credit. Generally, the tax credit covers 100% to 110% of the prior year’s bill. That’s the basis for calculating the tax credit.
If you have any questions for Kevin, you can reach him at kmitrick@ssvlegal.com or (312) 788-7684. As always, if you have any real estate questions, give me a call or send me an email. I would be happy to help you!
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