How a 2020 recession will impact you and your taxes in 2021

On Behalf of | May 5, 2020 | assessment appeals | 0 comments

Americans nationwide are worried about their financial well-being—understandably so. We are experiencing unprecedented times. Many economists predict that America and the world are about to experience a serious economic downturn. Are you ready?

Property Taxes Do Not Keep Up With Economic Downturn

One thing became abundantly clear during the 2008 recession: property owners can experience unexpected tax burdens that threaten their livelihoods in unique ways.

According to the Brookings Institute, cities and states experiencing recession immediately see changes in sales tax and income tax revenue. But property taxes will remain the same for a while. This is for a simple reason: during a recession, property owners are often taxed based on pre-recession property values.

This means that, in the wake of an economic downturn, property owners pay the bill, even though the value of their property may plummet.

What You Need To Know To Protect Yourself

Illinois is no stranger to hardship, and our citizens are resilient. Right now is the time to prepare.

The average property owner should begin to save in advance for property taxes, especially those who may see a reduction in wages. For some, there may still be time to request an updated property assessment. Some economists believe that the 2020 downturns will have a relatively limited impact on the value of many entry-level properties. However, having an accurate idea of your tax burden for 2021 can help guide your actions today.

Individuals, families and businesses with larger investment properties will be most likely to see major value loss. In those cases, individuals should also work closely with their tax attorney and other tax professionals to decide on a course of action that accounts for their property plans and business model.

The Takeaway: Expect A Market Upset

The uncertainty we face in these next months will impact your finances, but it may not reflect in your property taxes. You should prepare yourself for a higher percentage of your income to go towards those taxes in the upcoming year. Putting a plan into place and acting according to a thoughtful strategy is the ideal way to protect yourself, your family and your business.