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Illinois Department of Revenue Real Property Sales Ratio Study - This article attempts to give a detailed explanation based on the 2008 assessment year.
is important to understand that the IDOR (Illinois Department of Revenue) maintains
functional control over the assessment process by utilizing a sale ratio study.
With this study the IDOR calculates a tentative multiplier each year.
This multiplier or factor is used to force assessment up or down
depending upon the result. Since the
2000 decade when the real estate market continued to appreciate through 2006.
back to the Illinois Department of Revenue Sales Ratio Study this explanation is
based on the 2008 assessment year. The IDOR Sale Ratio Study uses a three
year average of three sets of three years of median sales ratio to calculate the
tentative multiplier each year. So
for the 2008 tentative multiplier the sale years in the study were 2007, 2006,
2005, in one set then 2006, 2005, 2004 in the next set and finally 2005, 2004,
2003. So each year the sales from
the year just ended enter into the study and the oldest year drops out.
The Chief County Assessment Officer screens the sales so that only
“Market Value” sales and sales with prior year full assessments only enters
into the IDOR Sales Ratio Study. Please
see www.willcountysoa.com FAQ for a
definition of these terms.
rational to conduct the study like this is so the economics of a single year
does not have a great influence on the study results.
As an example prior to 2007 when the housing market was appreciating
sometimes twenty to thirty percent but
last time there were lower sustained stable tentative multiplier from the IDOR
Sales Ratio Study was from 1995 through 1999.
The news seems to report the housing slump will continue through 2009.
If this is the case I predict that the tentative multiplier will continue
to decrease for the 2009 and 2010 assessment years.
Smaller assessment increases usually translate into smaller increases in
the tax bill amount. This would be
dependent upon tax rate changes. The
IDOR Sales Ratio Study can yield a negative result to force assessments downward
so the total assessed value would actually decrease.
It would be dependent on how long the housing slump last and how low
sellers are willing to drop the sale price of their real estate.
It is important to note that a forced lower total assessed value in a
township will not translate into lower real estate taxes.
To better understand this statement see additional information link again
and read topic on relationship of levy, tax rate, and
back to the example in the second paragraph where one example of a sale ratio
was calculated to be .3077. Let us
assume this was the three year average median result of the IDOR Sales Ratio
Study to understand how the tentative multiplier is calculated.
The IDOR tentative multiplier is the factor necessary to raise the three
year average median sale ratio to .3333. It
is calculated by dividing the state mandated assessment level by the three year
average median result from the sales ratio study (.3333 divided by .3077 equals
1.0832) a little more than eight percent for this hypothetical example.
When the tentative multiplier is positive it forces an increase in
assessed values. When the tax rate
is stable or increases this will increase the tax bill amount.
When the tax rate decreases it will offset some degree of a tax bill
increase even when the assessment is increased.
three year average median sale ratio calculated from the IDOR Sales Ratio Study
is considered to be a reflection of the entire assessment jurisdiction. So
the total assessed value must increase or decrease dependent upon the IDOR
tentative multiplier. This does not
mean each residential parcel will receive the same increase or decrease.
It is the assessor’s job to equalize assessments within their
jurisdiction by applying varying amounts of assessment changes to maintain
equity according to state law. Once
the assessor’s re-assessment of the jurisdiction is complete the Chief County
Assessment Officer will check to see if the assessor’s assessment changes were
enough to satisfy the IDOR tentative multiplier.
When the local assessor assessment changes are less then the required
increase or decrease to satisfy the IDOR tentative factor the Chief County
Assessment Officer will apply a township multiplier across all parcels to make
up any deficiency. This process is
called equalization and is used to prevent unequal sharing of a tax burden when
a taxing body’s property tax revenue is split between different townships.
The new IDOR tentative multiplier for each year is given to the assessors
at an annual December meeting held by the Chief County Assessment Officer.