Property Tax Proration Basics in Chicago Closings

Buying or selling in Chicago and confused about property tax credits at closing? You are not alone. Cook County’s billing schedule makes taxes feel out of sync, which is exactly why prorations exist. In this guide, you will learn why taxes are prorated, how credits are calculated, what to watch for in Chicago, and a simple example you can follow. Let’s dive in.

Why Chicago taxes are prorated

Illinois property taxes are billed a year after they are assessed, so they are paid in arrears. That timing is the core reason you see a tax credit at closing. You can confirm this in the Illinois Department of Revenue’s guidance on property tax billing paid in arrears. See the state’s explanation.

Cook County also uses two installments. The first installment is an estimated 55 percent of the prior year’s total tax and is typically due in early March. The second installment is sent in summer and reflects the actual rates and assessments for the tax year. Check the Cook County Treasurer’s page for current due dates and installment details. Review Treasurer due dates.

How proration works at closing

At closing, the seller gives you a credit for their share of the current year’s taxes from January 1 up to the closing date. That is because you will receive the full year’s bill later even though you did not own the home all year. This credit helps you cover the seller’s portion when the bill arrives. Learn the basic concept of the seller credit.

Most standard Chicago contracts say taxes are prorated as of the closing date and allow a post-closing adjustment if the final bill is different from the estimate. The exact language in your contract controls the final treatment, including whether you re-prorate after closing. See typical contract provisions on tax proration.

Two ways to estimate the credit

Last year’s bill with a buffer

The most common approach is to use the most recent full year’s tax bill and apply a modest buffer to account for likely increases. In Chicago, many closings use 105 to 110 percent of the last full bill as the annual estimate. This is custom, not a law, and it is used to reduce the chance of a large post-closing adjustment. Read how Chicago practitioners use 105–110 percent.

Estimate from assessed value and rate

If new assessment data or official estimates are available, your attorney or title team may calculate an estimated current-year tax using the assessed value multiplied by the current tax rate, then prorate at 100 percent of that estimate. This approach relies on the latest available information. See how practitioners estimate from current assessments. You can also review how the Assessor’s office explains assessments, exemptions, and how they feed into the tax bill. Understand assessments and exemptions.

Step-by-step example

Here is a simple example using the last full bill with a buffer and a 365-day year:

1. Pick an annual tax base. Last full bill is $6,000. You and the seller agree to use 110 percent as a buffer, so the estimated annual tax is $6,600.
2. Convert to a daily amount. $6,600 ÷ 365 = $18.08 per day.
3. Count the seller’s days. Closing is April 30. Count January 1 through April 30 for 120 days, based on typical local practice.
4. Multiply. 120 days × $18.08 = $2,169.60. That amount appears as a credit to you and a debit to the seller on the closing statement.

Your contract may specify whether the closing day is charged to the seller or to you, and some settlements use a 360-day year. Always confirm the day count and closing-day rule with your attorney or settlement agent.

Cook County installment timing

Because Cook County’s first installment is an estimated 55 percent of the prior year’s bill, it is not a final statement of the year’s taxes. If the seller already paid the first installment before closing, the closing statement will account for that payment. If the first installment is unpaid and due after closing, your contract and local custom will determine who pays it or how the credit is handled. For current-year deadlines, check the Treasurer’s website for exact dates. Check current installment dates.

Chicago watchouts that affect proration

Reassessments and exemptions

A reassessment, a successful appeal, or a change in exemptions can change the final bill. That is why the 105 to 110 percent buffer is common and why many contracts allow a re-proration after closing if the final bill differs. Learn more about using updated information. For context on how assessments and exemptions work, review the Assessor’s overview. Assessor’s tax bill overview.

Multiple PINs and condo items

Some properties have more than one Property Index Number for things like a deeded parking space or land and improvements billed separately. Make sure every PIN tied to the property is included in the proration. Your attorney and title company will confirm this as part of their review.

Lender escrow accounts

If the seller’s mortgage has a tax escrow, that does not replace proration. The lender typically refunds any escrow balance to the seller after closing. The proration credit still ensures you have funds to pay the upcoming bills. See how escrows are treated in practice.

Distressed sales

In some short sales or foreclosures, parties may agree to prorate at 100 percent of the last bill without a buffer. This is negotiated and can vary based on lender requirements.

Quick buyer and seller checklist

• Confirm the correct PIN and the most recent full tax bill, and request duplicate bills if needed. Use the Treasurer’s portal.
• Decide which estimate method you will use: last full bill with a 105–110 percent buffer or an assessed value times rate estimate.
• Ask whether the seller has already paid the first installment and how that will show on the closing statement. Verify due dates with the Treasurer.
• Clarify day counting: 365 or 360, and whether the closing day is charged to the seller or to you.
• Confirm whether your contract allows a post-closing re-proration and how any differences will be settled. Review typical proration clauses.

If you want a smooth, stress-reduced closing, partner with a team that handles these details early and communicates clearly. For thoughtful guidance and a seamless experience, connect with Sandy Hunter Homes. We help you understand your numbers, set expectations, and close with confidence.

FAQs

What is property tax proration in Chicago?

• It is a credit the seller gives you at closing for their share of the current year’s taxes that accrued before you owned the home, since Cook County bills taxes in arrears.

Who pays Cook County’s first installment at closing?

• It depends on timing and your contract. If the seller already paid it, the closing statement reflects that payment. If it is unpaid, the parties handle it through the proration or per the contract.

How does the 105 to 110 percent estimate work?

• Many Chicago closings use 105–110 percent of the last full year’s bill as a cushion to cover likely increases, with a re-proration later if the final bill is different.

Does a mortgage escrow replace the tax proration?

• No. The lender usually refunds any seller escrow balance after closing. The proration credit still ensures you have funds to pay upcoming tax bills.

How is the closing day counted in the proration?

• Your contract controls this. Some settle with the closing day charged to the seller, others to the buyer, and some use a 360-day year instead of 365.

Where can I look up my Cook County tax bill and PIN?

• Use the Cook County Treasurer’s portal to confirm your PIN, view bills, and request duplicate statements if needed.