Financial planner: Buy out-of-state property for retirement to avoid Illinois’ property taxes

A financial adviser says some residents preparing to retire are eyeing moving out of the state entirely, and it’s not just for better weather. https://www.ilnews.org/news/economy/financial-planner-buy-out-of-state-property-for-retirement-to/article_1ecc15e4-f7ed-11e8-a183-4b3dcf552474.html

A financial adviser says some residents preparing to retire are eyeing moving out of the state entirely, and it’s not just for better weather.

Although Illinois doesn’t tax retirement income, that doesn’t mean it’s the best place for all retirees, said Buffalo Grove-based financial planner John Bever.

“But on the other hand, our property taxes are extremely high,” Bever said. “We have the second-highest property tax rate in the nation, and that is a disincentive for retirees to stay in the state.”

Bever said he helps clients find investment properties in other states where they can eventually go to retire.

“It’s one of the strategies that we’re using with retirees to help them manage the difficulties of what the legislature has created in the state of Illinois,” Bever said.

With the state’s unfunded liabilities, it’s hard for lawmakers to get policies in place that encourage people to stick around, Bever said.

Americans For Prosperity Illinois State Director Andrew Nelms doesn’t blame taxpayers for seeking greener pastures with lower property taxes. He said if property taxes aren’t addressed, people will continue to leave.

“Up until about a year ago, we were the fifth most populous state. Now we’re the sixth. We were taken over by the Commonwealth of Pennsylvania,” Nelms said. “People are leaving and it’s not because of the weather.”

Some state lawmakers say property taxes are a local issue.

“We know that some of the property tax challenges, particularly in certain parts of the state, particularly those that border other states, are more local issues than they are us,” said state Rep. Will Davis, D-Hazel Crest. “Some of the decisions on the rates are made locally.”

Illinois Municipal League’s Brad Cole said that’s true, but a major driver of increased property taxes is pension mandates from the legislature.

“Most communities are putting a 100 percent of their property tax into their pension payments, if they can’t keep up, it’s because they can’t raise their property tax,” he said. “Now if we can solve the pension issue, we won’t have to increase property tax and the whole system will work out.”

Cole said consolidating the hundreds of local public safety pension funds is a start, but so is relieving communities of other unfunded mandates dictated by the state government.

Nelms said absent good public policy to reduce property taxes locally, action is needed at the state level.

Davis expects to clash with some local governments in addressing the issue, but he said it will be a focus in the new year.

House Revenue and Finance chairman state Rep. Mike Zalewski, D-Riverside, said addressing property taxes will require “four or five things we need to pull on at once to get it done, but I think it will be one of our top priorities.”

https://www.ilnews.org/news/economy/financial-planner-buy-out-of-state-property-for-retirement-to/article_1ecc15e4-f7ed-11e8-a183-4b3dcf552474.html

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