Illinois Real Estate Tax Credit

[tlaura]

I moved to IL in August 2020 and purchased a home. The questions asked about real estate tax credit are about whether or not IL was my primary home in 2020. The previous owner provided a credit at closing for the real estate taxes from Jan to Aug and I paid the rest. What do I need to do to get the tax credit?

[ColeenD3 · Accepted solution]

Yes, you are eligible for the portion you paid.

Am I eligible for a property tax credit?

You will qualify for the property tax credit if:

1. your principal residence during the year preceding the tax year at issue was in Illinois, and
2. you owned the residence, and
3. you paid property tax on your principal residence (excluding any applicable exemptions, late fees, and other charges). See below for other exclusions.

Notes:

• If you are married and both you and your spouse qualify for a property tax credit on your principal residence, and you are filing separate Illinois returns, you may each claim a property tax credit. However, the total amount of credit claimed between both spouses may not exceed 5 percent of the qualifying property tax.
• Illinois property you purchased - You may figure a credit for Illinois property you purchased during 2020 providing you figure only that portion of your taxes that pertains to the time you owned and lived at the property during 2020. You may not take a credit for taxes you paid if the seller reimbursed you at the time of closing. You also may not take a credit on your 2021 return for property you purchased in 2021.
• Illinois property you sold - You may figure a credit for Illinois property you sold in 2021 by combining the 2020 property tax paid in 2021, as well as a portion of the 2021 tax paid based on the time you owned and lived at the property during 2021. You may not take a credit on your 2021 return for property sold during 2020.
• Nonresidents of Illinois may not take this credit.

Please see this LINK for more information.

[Mike9241]

IL is one year behind in assessing taxes. so the 2020 taxes are payable in 2021.

since you only owned the property for the later part of 2020, you got a credit for the taxes you'll pay in 2021 for the portion of 2020 you did not own the house.  so your2021 RE tax deduction is the amount you paid in 2021 for 2020 less the credit you received.

When you get to the state Turbotax should ask four questions about your Illinois property taxes. they all must be answered yes, for the amount enter the net paid, you also need to enter your county and property tax number(s).

if your Illinois adjusted gross income is more than #250,000 you lose the credit.

[edjones]

Turbo is right.  The income limitation was somewhat hidden. Thanks.

[erndisney]

Hi,

 I'm a full resident of Illinois. When I go through the steps in Home and Business, when I get to the end it says I have 0 credit for my real estate taxes paid?

 Is there an issue with this program.

 Thanksin advance.

[DaveF1006]

It depends.  If you are talking about the Illinois property tax credit, please read this FAQ that give complete information about the credit. especially the Federal Adjusted Gross income limitations as well as the eligibility to take the credit. 

If you meet the requirements after reading the FAQ, you claim the credit when you prepare your illinois State return. Scroll to the section titled Take a look a Illinois Credits and taxes>property tax credit. If you have made entries here, be sure you answered all questions correctly to receive the credit. 

If you haven't made any entries in this section, you will need to complete it to receive the credit. All four of these questions need to be answered yes before you qualify for the credit including the county and Property Index Number(PIN).

This credit is also non-refundable meaning you may not had enough Illinois taxable income to take advantage of this credit because there was not enough tax liability to offset the credit against.  

These could be some of the reasons why you haven't received this credit.

@erndisney 

[erndisney]

Hi Dave,

 All questions have been answered yes, I'm not over 250,000 but have made enough that the credit should be available.

 That's why I'm asking if there is a bug in this program.

 I'm using the Home and business version.

 Thanks in advance

[HelenC12]

No, there isn't a bug in the TurboTax CD\Download Home & Business version. I recreated your situation and was given the IL property tax credit. 

Verify the following:

1. That your Adjusted Gross Income (Form 1040 Line 11) is less than $250,001 for single and $500,001 for Married Filing Jointly
2. On the Property information screen, make sure you enter your County and PIN
3. On the IL Property taxes screen, make sure you did not enter amounts in Amount not on principal residence or Property tax reported as business expense.

[erndisney]

Hi Helen,

 Nope still doesn't work.

 Deleted everything to do with the taxes, re-entered everything, shows that I paid the taxes, all questions are yes, not in the wrong boxes, but still comes up and states that the credit is 0.

 Went into the forms to see if everything looks good there, shows the taxes paid  shows ) in all the other boxes, besides the the 4G box, which shows the total of the taxes paid X 5%.

 Just won't show up in the final page. States your property tax credit is $0.00

[HopeS]

The general rule is Individuals can claim a credit against personal income tax liability for part of the real property taxes paid during the tax year on a principal residence in Illinois.

Therefore property tax credit will be used to offset your Illinois Income Tax on line 14 of your Illinois Form IL-1040. Review your state return to see if it shows income tax on line 14, if it doesn't you won't get the property tax credit since this is a non-refundable credit that is used to offset your tax liability.

@erndisney 

[erndisney]

Hi Hope,

It shows 0 on line 14, but it also shows that we are getting a refund from the state.

 Does that make sense??

[HopeS]

Yes, it makes sense. If your tax liability is zero and you had paid taxes to the State then you will get those taxes refunded. Also, other credits are refundable such as Earned Income credits.

@erndisney