Illinois Property Tax Credit

              Illinois Department of Revenue
Publication 108
Purpose:
To clarify what property tax is
eligible when you figure a
property tax credit on an Illinois
Individual Income Tax Return
Objectives:
To identify what you may and
may not include when you figure
a property tax credit
To identify when you are eligible
to take a property tax credit
To identify what you may include
when you figure a property tax
credit if you are buying, building,
or selling a house
Illinois Property Tax Credit
What is the Illinois Property
Tax Credit?
Illinois allows a property tax credit on
your individual income tax return
equal to 5 percent of Illinois Property
Tax you pay on your principal
residence.
You may figure your Illinois Property
Tax Credit by completing the
Homeowner’s Property Tax (PT)
Worksheet. You will find a copy of this
worksheet on the last page of this
publication and in the Form IL-1040
Instructions.
What property tax may I
include when I figure a
property tax credit?
You may include the following when
you figure your property tax credit:
Property tax paid on your principal
residence if it is located in Illinois.
Property tax paid on an adjoining lot
to your principal residence, if it is
used for residential purposes.
Prorated property tax that you paid in
the year you sold your Illinois
residence.
Illinois village tax that you paid in the
tax year.
Multi-unit property tax that you paid,
only if your principal residence is one
of the units. Include only the tax
assessed on the unit that is your Illinois
residence.
What may not be included when
I figure a property tax credit?
You may not include the following when
you figure your property tax credit:
Property tax assessed on property
that is not your principal residence.
For example, you may not claim tax
on property that you do not live in or
consider your principal residence.
Examples would be a vacation home,
a vacant lot, rental property, property
outside of Illinois, and farm land.
Interest penalties or fees you paid
because your property tax
installments were paid late.
The property tax due that you did not
pay in the tax year.
For example, if you did not pay one or
both property tax installments on your
2001 taxes in 2002, you may not
claim the 2001 taxes that you did not
pay on your 2002 Form IL-1040,
Individual Income Tax Return.
Accountant fees or lawyer fees paid in
association with your property tax.
Homeowner’s association dues or
fees paid.
Property tax paid on an out-of-state
home.
When should I include property
tax in my property tax credit?
Generally, you may figure a credit on
the property tax you paid on your
principal residence for the prior year.
For example, you may use the
property tax you paid in 2002 for your
2001 residence to figure your
property tax credit on your 2002
IL-1040 filed in 2003.
What if I bought a house?
If you bought a house during the
current tax year, you may not use the
property tax on that house to figure
your credit for that year.
For the period of time that the seller
lived in the house, the tax was
prorated and paid by the seller at the
time of closing. The tax for the
remainder of the year will be assessed
to you and paid in the following year.
For example, you may not use the
property tax paid on a house you
bought in 2002 on your 2002 return.
The seller was liable for the tax and will
take the property tax credit.
If you bought a house during the
previous tax year you may use the
property tax on that house to figure
your credit providing you figure only that
portion of your taxes that pertains to the
time you owned and lived at the
property during the tax year. For
example, if you purchased and began
living in a house in October 2001, you
may use an amount equal to three
months of your total 2001 property tax
to figure your 2002 property tax credit.
What if I built a house?
If you built a house, you may not figure
a property tax credit for tax you paid on
the vacant lot or the new house before it
became your principal residence.
For example, if you built a house in
2001 but did not move in until early in
2002, you may not include any property
tax that you paid when figuring your
property tax credit for your 2002 return,
filed in 2003.
What if I sell my house?
If you sell your house, you may include
the prior year’s property tax that you
paid and
the current year’s prorated tax that
you paid at the time of closing
when figuring your property tax credit.
For example, if you sold your house
during 2002, you may include the 2001
tax and the 2002 prorated tax that you
paid at the time of closing when figuring
your 2002 property tax credit on your
2002 return, filed in 2003.
However, if the house you are selling is
vacant for a period of time before it is
PUB-108 (R-3/03) Page 1 of 3