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Rehabbing a Historic Property the Right Way Can Yield Property Tax Savings

Pink Victorian homeRehabbing a historic home can come with many headaches. There are the high costs associated with electrical rewiring, making foundation and structural repairs, reconfiguring plumbing, removing environmental toxins like asbestos, lead, radon, wood rot and mold. What you don’t hear about is that qualifying applicants can save money on their property taxes by applying for the Property Tax Assessment Freeze prior to beginning a rehab project.

The Property Tax Assessment Freeze Program freezes the assessed value of a historic, owner-occupied, principal residence for eight years when the owner undertakes a substantial, approved rehabilitation. The assessed value is brought back to market level over a period of four years. The Program, administered by the Illinois State Historic Preservation Office, is free to Illinois homeowners.

To qualify for the Program, a property must:

  • be a certified historic structure, either by being listed on the National Register of Historic Places individually or in a district, or by local landmark designation in a community with an approved historic-preservation ordinance

  • be a single-family, owner-occupied, principal residence; or a condominium building; or a cooperative building; or a residential building with up to six units as long as the building owner resides in a unit

  • undergo a rehabilitation whose budget exceeds 25% of the property’s assessor’s fair market value within a 24-month period; and

  • undergo a rehabilitation that meets the Secretary of the Interior’s “Standards for Rehabilitation.”

How do you apply?

  • Step 1: Determine if you qualify.

    • Contact the Illinois State Historic Preservation Office or your local landmark commission to ask if your property qualifies as a certified historic structure.

    • Determine the assessor’s fair market value of your property by contacting my office, your assessor or referring to your current property tax bill.

    • Decide whether the work (interior and exterior) will cost more than 25% of the assessor’s fair market value.

    • Contact the Illinois State Historic Preservation Office to discuss whether your work can meet the “Standards.”

  • Step 2: Get your planned work approved.

    • Consult the Illinois State Historic Preservation Office’s website for a more thorough explanation of the program, its application and instructions.

    • Prior to construction, if possible, fill out and mail Parts 1 and 2 of the application with the rehabilitation plans and pre-construction photographs.

    • The Illinois State Historic Preservation Office will determine if the work complies with the “Standards.”

  • Step 3: Get your work approved.

    • When the project is finished, fill out and submit Part 3 with photographs showing the completed word, a spreadsheet of expenses, and copies of receipts.

    • If the Illinois State Historic Preservation Office determines the project meets all the requirements, they will mail you and the assessor a Certificate of Rehabilitation.

It is important to note that during the period of time in which the property is vacant for rehab, you may be entitled to property tax relief. Please contact my office at 847-869-8686 for assistance with a possible appeal based on vacancy.