Definitions of Property Tax Terms

Below, for your convenience, are definitions of several terms which are used frequently in discussing the property tax system.

Ad Valorem

According to value.

Assessed Value

The value placed upon property after multiplying the assessment level by the market value.

Assessment

The official act of discovering, listing and appraising property for ad valorem tax purposes – currently 33.33 percent.

Assessment Level

The percentage of full value at which property is assessed as mandated by state law.

Assessor

The government official responsible for establishing the value of property for ad valorem tax purposes.

Board of Review

A panel of three residents of a county, experienced in real estate appraisal, who review complaints filed by individual taxpayers. The Board of Review has specific statutory responsibilities to perform during a designated period of time.

Equalization

The process of providing uniform aggregate assessments between townships and counties (see multiplier).

Equalized Value

The assessed value multiplied by the county and/or state multiplier. This calculation gives the value of the property to which the tax rate is applied.

Extension

This term is used in two different contexts: 1) The process in which the county clerk determines the tax rate needed to raise the revenue certified to the clerk by each taxing body in the county; and 2) The actual dollar amount of revenue resulting from the tax rate when it is multiplied by the assessed value of a district.

Improvement

Any structure, addition or other product of labor which is attached, lying upon or within the land that may not be removed without physical stress.

Levy

The amount of money that a taxing body requires to be collected through the property tax system.

Market value

The most probable price, estimated in terms of money, which a property would bring in a sale between a willing buyer and seller under arms-length conditions.

Mass Appraisal

The process of valuing a universe of property by employing a common reference for data in allowing for statistical testing.

Multiplier

A figure used by county and state officials and applied uniformly to all parcels within a township to “equalize” assessments between townships and counties so that all values reflect the same assessment level.

Permanent Index Number (PIN)

A 10-digit number used to identify property for tax purposes. This number is used in place of lengthy legal descriptions.

Property Tax Appeal Board

A state-level panel of five residents, experienced in assessment appeals, who review complaints by property owners who are unsatisfied with decisions rendered by the Board of Review.

Quadrennial Reassessment

The assessment that takes place every four years during which the township assessor must revalue property based on the previous three years’ sales activity.

Taxing Body

An organization or government body having the statutory right to fund itself through the property tax system. Examples include schools, park districts, villages and townships.

Tax Rate

A percentage applied to each taxing body’s assessed valuation which will produce the amount of that taxing body’s levy, or, in other words, the levy divided by assessed value equals the tax rate. The tax rate is expressed in terms of “dollars per $100 of assessed value”.

Taxing District

The geographic area whose boundaries define the taxing jurisdiction for a group of taxing bodies.