January, 2016

State Laws You Should Know

The Model Home Act

Bill Ward, Executive Vice President, HBAI

In 1985, HBAI advocated for a new section to the Illinois Revenue Act that would change the manner in which assessors value single family homes which are used as model homes.

The Model Home Act allows single family homes, condominiums, and town homes which are used for display or demonstration model homes, if properly eligible and qualified, to be assessed for real estate taxation purposes at the fair market value of the land upon which they are built prior to the construction of the home.

In order to be eligible for the benefits of this law the dwelling unit must: 1. Not be occupied as a dwelling unit; and 2. Be used as a display or demonstration unit model home for prospective buyers of either that dwelling or of similar homes built on other tracts or lots.

The Model Home Act battles the same evil that the Vacant Lot Act addresses: imposing taxation prior to reaping any benefits. The difference between the two is this: the Vacant Lot Act happens automatically; the Model Home Act requires a verified application prior to receiving the benefit.

HBAI has improved this law over the years:

• Use of furnishings, appliances, offices and office equipment used for sales activities shall not affect the tax level of the model home (1993);

• Townhomes & Condominiums were expressly added in 1994;

• We extended the deadline for filing an application for special assessment to April 30 in Cook County and December 31 in all other counties (1999).

There is a limit of 3 homes in a 3 mile radius, but no limit to how many radiuses may be used, as long as they are incongruent, (Chapter 35 ILCS 200/10-25).