Chicago property taxes are paid a year behind. So the tax figure on a listing describes a year that's already over, and for an investor that lag can quietly break a spreadsheet.
Here's a version of the math I walk people through. Say you're looking at a two-bed, two-bath in one of the converted loft buildings off Washington Boulevard, listed around $475,000. The listing shows taxes near $7,500. Based on what I've seen lease in the West Loop this year, that unit rents for roughly $3,600 a month. HOA is $500. Run those numbers and the deal looks fine.
Now look closer at that $7,500.
The seller lives there. That bill almost certainly carries the homeowner exemption, and you lose it the moment the unit becomes a rental. That's several hundred dollars a year gone before your first tenant moves in.
The bigger issue is the assessment itself. The city gets reassessed every three years, and the assessor leans on recent sales to set values. If you pay more than the last recorded sale in that building, your purchase becomes one of the comps that pushes the number up next round. The West Loop has moved enough that I'd never assume a tax bill holds flat.
So I'd underwrite that unit closer to $9,000 a year, not $7,500. That $1,500 gap is almost half a month's rent, every year. Most West Loop condo rentals run on thin cash flow right now, and a swing that size can turn a small positive into a small negative.
I'll say it plainly: too many investors here buy on the listing's number. They calculate a cap rate off last year's bill and stop there. I'd rather you pad the tax line and get a pleasant surprise than the other way around.
A few notes for everyone else reading:
- **First-time buyers:** you get the exemption the investor loses. Make sure it's actually filed after closing, because it doesn't happen automatically. - **Sellers:** if your likely buyer is an investor, expect them to discount for this. The smart ones will.
Before you make an offer on any unit, ask me to pull its assessment history. It takes about five minutes, and it shows you the number you'll still be paying in year three.