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The County of DuPage
Wheaton, Illinois
 

Glossary: Common Property Tax, Appraisal and Assessment Related Terms

  • 33 1/3%: The statutory level of assessment in Illinois. In the context of the Illinois Property Tax System, it refers to 33 1/3% of the actual value of real property as determined by the Department of Revenue’s (assessment) Sales Ratio studies for the three most recent years preceding the assessment year, adjusted to take into account the implementation of any changes in assessment levels since the data for such studies were calculated.

  • Abatement: a reduction in a tax. For example, a unit of government may reduce its levy by filing an appropriate resolution with the County Clerk prior to extension.

  • Ad Valorem: according to value.

  • Ad Valorem tax: a tax levied according to value.

  • Actual Age: the number of years that have elapsed from the year of construction to the present date.

  • Assessed Value: the value placed on property for tax purposes and used as a basis for distribution of the tax burden. Most of the time this amount is subject to the State-issued equalization factor and the deduction of the homestead exemption on residential parcels.

  • Building Residual: the building value; sale price, less the lot value, equals building residual.

  • Capitalization: a mathematical process for converting the net income produced by a property into an indication of value. (Present value of future worth.) Used in the Income Approach to value.

  • Capitalization Rate: consists of the discount rate, recapture rate, and effective tax rate.

  • Certificate of Error (COE): a certificate issued by the assessing official that may be used as evidence in court to correct an error in an a tax bill after it is issued. COE’s may only be issued for an error of fact in the calculation of the assessed value or the tax bill. In DuPage County, once a COE is initiated, the County seeks the correction on behalf of the taxpayer without requiring the taxpayer to file a lawsuit.

  • Coefficient of Dispersion (COD): average deviation of a group of assessment ratios taken around the median; used to measure uniformity of assessments.

  • Cost Approach: calculating the cost of reproducing the improvements, subtracting accrued depreciation, and adding land value.

  • Cost Factor: used to adjust the schedules in the manual for differences in local construction labor and material rates.

  • Depreciation: loss of value from any cause, i.e., physical depreciation, functional obsolescence, and economic obsolescence.

  • Depth Factor: the factor used to adjust the front foot price of a lot because the front portion of a lot is deemed more valuable than the rear portion.

  • Effective Age: age of an improvement based on the improvement’s observed condition; effective age does not always equal actual age.

  • Effective Tax Rate: the ratio of taxes billed to the market value, generally expressed as a percentage. It is found by multiplying the level of assessments by the current local (aggregate) tax rate. It would be applied to the full market value.

  • Equalization Factor: a factor applied to each jurisdiction so all jurisdictions assess property at the same level of market value.

  • Equalized Assessed Value (EAV): assessed value multiplied by any applicable equalization factor equals EAV.

  • Extension: the process in which the county clerk determines the tax rate needed to raise the revenue (levy) certified by each taxing district. The actual dollar amount billed to property taxpayers in district.
  • Fair cash value:  The amount for which a property can be sold in the due course of business and trade, not under duress, between a willing buyer and a willing seller. (Source: 35 ILCS 200/1-50)  

  • Front Foot Price: supposes that each foot of lot frontage is worth the same dollar amount; used to indicate lot value.

  • General Assessment Year: the assessment year that occurs every 4 years in which all property assessments are reviewed, formerly known as quadrennial assessment year.

  • Improvement: any structure attached to, lying upon or within the land, that may not be removed without physical stress.

  • Income Approach: calculating the present worth of the income from an income-producing property.

  • Legal Description: a description in words and numbers judged legally sufficient to locate and identify a parcel of land.

  • Level of Assessments: ratio of equalized assessed value to the market value, as typically demonstrated by recent property sales. In Illinois, the Property Tax Code requires the use of the individual three prior year’s sales ratios studies to measure the level of assessments within an assessment jurisdiction. For example, the official 2008 level of assessment is arrived by averaging the results of the 2005, 2006 and 2007 sales ratio studies, after adjustments for assessment revisions.

  • Market value: most probable sale price of a property, in terms of money in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale, and assuming that the transaction is not affected by undue pressures.

  • Mass Appraisal: The process of valuing a universe of properties as of a given date, using standard methods and allowing for statistical testing.

  • Neighborhood: The immediate environment or area having the most direct impact on a property's value.

  • Parcel Number: A unique ten digit number based upon the Rectangular Survey System that reflects the geographical location of a property, which is also know as a property index number.

  • Principle of Substitution: The informed buyer is not justified in paying anything more for a property than it would cost him to acquire an equally desirable substitute property.

  • Property Index Number (PIN): A unique ten digit number based upon the Rectangular Survey System that reflects the geographical location of a property, which is also known as a parcel number

  • Property Record Card (PRC): used to record individual property characteristics used to determine the assessment.

  • Property Tax Limitation Law (PTELL): The PTELL is designed to limit the increases in property tax extensions (total taxes billed) for non-home rule taxing districts. Although the law is commonly referred to as "tax caps," use of this phrase can be misleading. The PTELL does not "cap" either individual property tax bills or individual property assessments. Instead, the PTELL allows a taxing district to receive a limited inflationary increase in tax extensions on existing property, plus an additional amount for new construction.

  • Quality Grade: May be used to adjust schedules within a cost approach manual for differences in the quality of construction materials and workmanship.

  • Replacement Cost New (RCN): represents current cost of replacing an improvement.

  • Rectangular Survey System: also known as the Governmental Survey System, established in 1785; a system in which land is divided in a grid like fashion consisting of principal meridians, baselines, townships, ranges, and sections.

  • Remaining Economic Life (REL): period of time over which a prudent investor would reasonably expect to recapture his investment.

  • Sales Comparison, or Market Approach: calculating the value of properties by observing and analyzing the selling prices of comparable properties.

  • Sales Ratio Study: an analysis of the percentage relationship of assessed value to market value; ratio equals prior year assessed value divided by the current year sales price.

  • State Property Tax Appeal Board (PTAB): the highest state quasi-judicial body which hears appeals from taxpayers and taxing bodies on property tax assessment decisions by the county Board of Review.

  • Tax Cap: See Property Tax Limitation Law (PTELL)

  • Tax Rate: the amount of tax due stated as a percentage of the tax base, derived by dividing the levy by the EAV. (some districts have a maximum statutory rate; the sum of the fund rates equals the total district rate).

  • Unit of Comparison: Breaking down the sales price or the assessment into similar terms which allow for comparing of different properties. Some common examples include the land assessed value per square foot and the building assessment per square foot and the sale price per square foot.
  • * Material from the IL-DOR publication PTAX-1-BR was incorporated into the above information.