Business owners are subject to certain property taxes based on the assessed value (estimated every three years in Illinois) of their commercial real estate. Some states tax personal business property, which encompasses furniture, inventory, equipment, fixtures and any items that contribute to drawing in income. Illinois is special in that it does not; it only taxes “real property,” which is essentially land, buildings and permanent improvements.
However, Illinois still possesses one of the country’s highest commercial property tax rates, and Cook County, where Chicago resides, is no exception. There are legal ways to lighten the burden or at least avoid paying more than necessary.
1. Tax abatement programs
Cook County offers several tax incentive programs meant to encourage urban development. These lower real estate tax assessment rates. Each has different requirements. For instance, the property might need meet specific purposes, sit in certain areas or have certain components like new improvements. These incentives are not permanent, only lasting for a period of time, though renewal is possible for a few.
2. Tax deductions
There are deductions associated with commercial real estate. Interest on mortgages is usually deductible. Buildings housing businesses depreciate in value over time. This depreciation is deductible. Illinois allows 100% bonus expensing. It does not allow 30%, 40% or 50% bonus depreciation.
3. Tax deadlines
Paying taxes on time is a universal way to save money among all the states. In normal times and situations, Illinois imposes a late fee of 1.5% of the amount owed per month the payment is overdue. Sending in the sum owed before or by deadlines is a good way to avoid additional charges.
Taking advantage of available programs and deductions is advisable. It can save businesses a great deal of money.