A quick overview of Cook County Tax Prorations:
Cook County tax bills are a year behind. For example, in 2022, the 2021 bills were paid in two installments. This year, 2022 bills will be paid in 2023. The 1st installment bills, normally due in March, are an estimate and are prorated at 55% of the previous year’s bill. The 2nd installment (usually issued around August) includes updated information such as exemptions, and new assessed values.
Most commonly, tax prorations for the current year are prorated at 105% or 110% of the previous year’s total tax bill. The proration is agreed to in the contract . The seller credits the buyer for the days the seller has owned the property in 2022 & 2023. The buyer will then pay the tax bills when they come due.
The new amount is then divided by 365 (the number of days in a year – 366 on leap year), and is multiplied by the number of days until closing from the beginning of the year . Here’s an example calculation:
2021 full year of tax bill : $6,440.64
2021 full year at 105%: $6,762.67
2021 1st inst is: 3,454.92. (bill paid already)
2021 2nd inst credit (because this bill is not yet out) : 6,762.67 (full year x 105%) -3,454.92 (1st installment bill that is paid) = 2,985.72 (which will be the credit for the second installment.)
2022 tax bill estimate for 1/1/23 through 11/28 (date of closing) = 6,762.67
[full year at 105% divided by 365 (days in the year) which equals the per day amount (18.53/day) x 332 days (1/1/23 – 11/28/23 ; which are the days the seller has owned the property through closing)] =
6,151.25 credit for taxes