Higher Property Taxes cause home values to fall

Property-tax hikes have caused taxes on NBA star Dwyane Wade’s former house to more than triple, driving away prospective buyers and showing the harm Illinois’ sky-high property-tax rates inflict on homeowners.

Dwyane Wade’s return to his hometown to play for the Chicago Bulls comes with a large income-tax bill, and, as the facts surrounding the attempted sale of his former home in South Holland, Ill., show, the 12-time NBA All-Star can count on sky-high property taxes as well.

The Chicago Tribune reported July 15 that Wade’s former home in South Holland, Ill., is available for just $350,000. Wade’s ex-wife, Siohvaughn Funches, is selling the unoccupied home, which was initially listed at $595,000 in March 2015. Property taxes on the home were originally $18,000 a year, but had skyrocketed to $58,000 by 2014. Funches is appealing the property-tax hikes, which have made the home difficult for her to sell. At $58,000 per year, the home carries an effective property-tax rate of 16.6 percent. In other words, over a six-and-a-half-year period, the homeowner will have paid more in property taxes alone than the value of the home.

Wade isn’t likely to buy back the South Holland house because, as Funches’ real estate agent, Greg Wallace, told the Tribune, the divorce means “it probably doesn’t have the best memories for him.” But the burdensome property taxes have made the home undesirable even for those without painful associations with the property. And regardless of which home Wade eventually buys or rents, it will come saddled with ever-increasing property taxes as well.

Chicago’s south suburbs have been ravished by high property taxes, which have depressed home values. South Holland’s Thornton Township has an effective residential property-tax rate of about 5 percent, and an effective commercial property-rate of over 12 percent. But that’s only about the average rate for the area – suburbs such as Calumet City and Park Forest have residential property-tax rates over 7 percent.

And Chicago’s south suburbs are just some of the many areas harmed by Illinois’ ever-increasing property taxes. Since 1990, residential property taxes in Illinois have grown more than three times faster than median household incomes, and Illinoisans’ residential property-tax burden – as a percentage of median household income – has risen 76 percent. And an April study by real estate services firm CoreLogic showed Illinois has the highest median property-tax rate in the nation.

Florida, where Wade played for the Miami Heat prior to signing with the Bulls, has effective property-tax rates about half as high as Illinois’, and a considerably lower state and local tax burden.

Someone like Wade, who has made more than $150 million on basketball contracts alone in his career, can afford the higher property taxes, the $890,000 state income-tax bill and themore than 30 local taxes with which Chicagoans are burdened.

But unfortunately, many middle-class families in Illinois – including those in the south suburbs of Chicago – do not have that ability. Many families, in fact, move in the opposite direction and head to Florida, or states such as Indiana or Texas, where opportunity is more abundant and taxes are less burdensome.

But if lawmakers were serious about passing a property-tax freeze for the entire state, more Illinois families might opt to stay. In April, the Illinois House passed a watered-down version of a property tax freeze, which didn’t apply to 7.8 million state residents, including all of Cook County.

Even as Wade’s former residence in South Holland continues to lose value, reform to ease the state’s crippling property-tax burden might not mean as much to someone with a $47.5 million contract. But for Illinoisans struggling to get by, reform – and relief – is critical.

TAGS: property taxes, taxes

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