The home improvement exemption: renovate without an immediate tax rise
Up to a statutory limit of added value is exempt for four years. Most people never claim it.
An exemption that exists specifically so improving your home does not immediately raise your tax bill — and which very few people know about before they build.
What it does
Under 35 ILCS 200/15-180, an increase in assessed value attributable to a home improvement is exempt, up to a statutory annual limit, for four years from when the work is completed.
You still get the improvement. You do not pay tax on the value it adds, up to the cap, for four years.
What counts
- An addition or extension
- Finishing a basement or attic
- A substantial renovation that increases value
- Rebuilding after damage, in some circumstances
It applies to owner-occupied residential property. Ordinary maintenance — a roof, a boiler, decorating — does not usually raise the assessment in the first place, so there is nothing to exempt.
How it is meant to work
In principle the assessor applies it when a permit-driven increase appears. In practice this depends entirely on the county and on whether the office connects the permit to the exemption.
Do not assume it was applied. Check the bill after the work is assessed, and if the increase appears without the exemption, raise it.
The mistake that costs people the benefit
Building without a permit.
Unpermitted work is discovered eventually — at a sale, an inspection, or an aerial imagery review — and when it is, the assessment rises. But the four-year exemption runs from completion, and an owner who avoided a permit has no dated record of when that was. They receive the increase without the relief they would have had.
The permit that felt like an expense is what protects four years of tax on the value the work added.
What happens after four years
The exemption expires and the full value of the improvement enters your assessment. This is expected, and it is worth planning for — a bill that jumps in year five is not an error.
What to do
- Pull the permit before the work. It is the dated record the exemption runs from.
- Keep the completion date and the final inspection record.
- Check the assessment in the year after completion and see whether the increase appears and whether the exemption was applied.
- Ask if it was not. This is a statutory entitlement, not a discretionary favour.
- Diary year five, so the increase is expected rather than alarming.
The wider point
The general homestead exemption is worth more to most households than any appeal. This one is worth more than either, to anyone about to spend money on a house — and it is decided before the work starts, by whether a permit exists.