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April 16, 2024

Lincoln-Way 210: Renter liable for real estate taxes:

By John Kraft & Kirk Allen

On February 27, 2016

Will Co., IL. (ECWd) –

This article will attempt to clear up who is responsible for real estate taxes on property owned by a public body and leased (rented/loaned, etc.) out.

A recent comment from a previous article questioned our assertion that the renter was responsible for real estate taxes on property they rented from Lincoln-Way 210.

From “Tom”:

I’m all for exposing the board & LW district for unethical dealings, but some of what is claimed in this article is misleading. Being that I own numerous rentals; I speak from experience, the renter would normally NOT be responsible for property taxes (unless that was written into the lease). That being said, the fact that there is NO lease/rental agreement smacks of impropriety…

The Illinois Property Tax Code explains the process to use for real estate owned by a public body, or any other tax exempt entity, and leased for nonpublic or other purposes.

Sec. 9-195. Leasing of exempt property.
    (a) Except as provided in Sections 15-35, 15-55, 15-60, 15-100, 15-103, 15-160, and 15-185, when property which is exempt from taxation is leased to another whose property is not exempt, and the leasing of which does not make the property taxable, the leasehold estate and the appurtenances shall be listed as the property of the lessee thereof, or his or her assignee. Taxes on that property shall be collected in the same manner as on property that is not exempt, and the lessee shall be liable for those taxes. However, no tax lien shall attach to the exempt real estate. The changes made by this amendatory Act of 1997 and by this amendatory Act of the 91st General Assembly are declaratory of existing law and shall not be construed as a new enactment. The changes made by Public Acts 88-221 and 88-420 that are incorporated into this Section by this amendatory Act of 1993 are declarative of existing law and are not a new enactment.
Here is a good example of the Court’s determination of a similar situation from Kane County: (Click Here)
The assessor must assess this property, and send the tax bill to the renter. The renter is responsible for payment of the tax bill, and no lien for nonpayment can be placed on the property. So if the renter fails to pay, the county has to chase after the renter for payment and cannot sell the property for nonpayment.
The school district is under no obligation, and has no responsibility, to pay real estate taxes on behalf of the renter. I would even go as far as stating that if the school district paid the real estate taxes, the payment was improper use of public funds and a violation of the Illinois Constitution, Article VIII, Section 1 (a). That lack of a formal lease is irrelevant.
Another option for the school district “PRIOR TO THE PURCHASE” would have been to place a referendum on the ballot to provide housing for teachers, superintendent, and principal. That did not happen with the purchase of this real estate, and therefore no public purpose can be claimed for renting the house out to the coach, rendering it a tax liability of the coach renting the house.
(105 ILCS 5/10-23.1) (from Ch. 122, par. 10-23.1)
    Sec. 10-23.1. Residence for superintendent, principal or teachers. To purchase a site, with or without a building or buildings thereon, to build a house or houses on such site or to build a house or houses on the school site of the school district, for residential purposes of the superintendent, principal, or teachers of the school district, if authorized by a majority of all votes cast on the proposition or propositions at a regular scheduled election held for the purpose in pursuance of a petition signed by not fewer than 300 voters or by 1/5 of all the voters of the district, whichever is lesser. Such referendum shall be certified to the proper election authorities and submitted in accordance with the general election law. When any of such property is not needed for residential purposes by the superintendent, principal, or teachers, the board of education may rent it to some other person or persons.
(Source: P.A. 81-1489.)
Another commenter on a previous article referred to this house as a “shack” – but did not explain why the school district would pay $110,000 for a so-called shack. Look at the pictures, and you will see it is not a shack.
Our next article will cover the PTAX-300 submitted by the school district, which is required when there is a change of use in tax exempt real estate.
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  • Jonny Q Public
    Posted at 17:19h, 27 February

    Those pictures show a pretty nice house. A garage, a nice big yard, a nice deck. Does LW pay for the landscaping too? For snow removal and salt?

    Again, must be nice to collect a six figure salary, and rent a nice place for dirt cheap. There are thousands of tax payers who would love that sweetheart deal. Who got the kickbacks…..

  • PropertyTaxLaw_
    Posted at 13:27h, 02 March

    Who is responsible for #PropertyTaxes on property owned by a public body and leased out? #WillCounty #Illinois