Inherited a Home With Back Taxes in Chicago? Here's What to Do

Discovering that an inherited property has unpaid property taxes is one of the more stressful surprises in probate real estate. It's also one of the most common. Cook County property taxes are complicated, paid in arrears, and easy to fall behind on — especially for elderly homeowners on fixed incomes.

The good news: back taxes on an inherited property are almost always resolvable. Here's what you're actually dealing with and how to handle it.

How Cook County Property Taxes Work

Illinois property taxes are paid in arrears, meaning the taxes for a given year aren't billed and due until the following year. Cook County sends two installments:

First installment — due March 1, based on 55% of the prior year's tax bill
Second installment — due in the fall (typically August or September), based on the current year's assessed value

This means that at any given time, a property owner is always "behind" by design — the current year's taxes won't be due for another year. This is normal and accounted for at closing through a tax proration.

What creates a problem is when prior years' taxes went unpaid entirely.

What "Back Taxes" Actually Means

When people say a property has back taxes, they usually mean one of two things:

Unpaid installments from prior years — The deceased stopped paying property taxes at some point, and one or more annual installments went unpaid. These accrue interest and penalties over time.

Sold tax liens — In Illinois, when property taxes go unpaid, the county sells the tax lien to a third-party investor at the annual tax sale. The investor pays the delinquent taxes and receives a certificate. If the property owner doesn't redeem the lien within a set period (typically 2–3 years), the lienholder can apply for a tax deed — which would transfer ownership of the property away from the estate.

The second scenario is more serious and time-sensitive. If a tax lien has been sold on the inherited property, you need to act quickly.

Step 1: Find Out Exactly What's Owed

The first step is pulling the complete tax history for the property. In Cook County, this is straightforward:

Go to the Cook County Treasurer's website (cookcountytreasurer.com) and search by address or PIN
This shows all unpaid taxes, penalties, and interest
It also shows whether any tax liens have been sold

Do this immediately when you take over as executor. The longer you wait, the more penalties and interest accrue — and if a tax lien has been sold, the redemption clock may be running.

Step 2: Understand the Redemption Period

If a tax lien has been sold in Cook County, the property owner has a redemption period to pay off the lien before the investor can pursue a tax deed. The redemption period is typically 2–3 years from the date of the tax sale, though it varies.

To find out if a lien has been sold and what the redemption deadline is, check the Cook County Clerk's records or have your estate attorney run a full title search.

If the redemption period is close to expiring, this becomes urgent. Missing the redemption deadline can result in loss of the property entirely — which would be a catastrophic outcome for the estate.

Step 3: Decide Whether to Pay Now or Resolve at Closing

For most estates, the practical approach is to resolve back taxes at closing rather than paying them out of pocket before the sale. Here's how it works:

The title company conducting the closing will require that all outstanding taxes, liens, and judgments be paid at or before closing. The back taxes — plus any accrued penalties and interest — are paid from the sale proceeds before the net amount is distributed to the estate.

This approach works well when:

The back taxes are manageable relative to the property's value
No tax lien has been sold (or if one has been sold, the redemption deadline isn't imminent)
The estate has enough equity to cover the taxes and still yield meaningful proceeds

If the back taxes are severe relative to the property value — for example, a property worth $150,000 with $80,000 in back taxes — you need to do the math carefully to understand what the estate will actually net.

Step 4: Factor Taxes Into Your Pricing Strategy

Back taxes affect pricing in two ways:

They reduce net proceeds. Whatever the taxes are, that amount comes off the top at closing. If you're hoping to net $100,000 from the sale and there are $30,000 in back taxes, you're netting $70,000.

They signal condition to buyers. Sophisticated buyers know that properties with significant back taxes often have other deferred maintenance issues. They may price their offers accordingly.

Be transparent about the tax situation with your real estate agent so the pricing strategy accounts for it accurately.

What About the Current Year's Taxes?

Even if there are no back taxes, every probate sale involves a tax proration — the seller (estate) credits the buyer for the portion of the current year's taxes that accrued while the estate owned the property.

In Cook County, where taxes are paid in arrears and the exact amount isn't known until the bill is issued, the proration is typically calculated based on 105–110% of the most recent tax bill. This is negotiated in the contract and resolved at closing.

Make sure your real estate agent and estate attorney are aligned on how the proration will be handled — it's one of the most common sources of last-minute closing surprises.

Can Back Taxes Be Negotiated or Reduced?

In limited circumstances, yes. Cook County has programs that can reduce penalties and interest on delinquent taxes for certain property owners — but these are primarily available to the original taxpayer, not estates. Your estate attorney can advise on whether any relief programs apply to your situation.

What can sometimes be negotiated is the tax sale redemption amount if a lien has been sold to a private investor. Investors occasionally accept less than the full redemption amount to get paid faster and avoid the tax deed process. This requires direct negotiation and is not guaranteed, but it's worth exploring if the numbers are significant.

Working With a Probate Real Estate Specialist in Chicago

Back taxes are a solvable problem in almost every case — but they require early attention, accurate information, and a pricing strategy that accounts for the reality of what the estate will net.

Andy Rouvalis is a licensed Illinois real estate agent (License #879470) with HomeSmart Connect, specializing in probate and inherited property sales across Chicago and Cook County. He works regularly with estates that have tax complications and knows how to navigate the Cook County tax system to get to closing.

Free consultations for executors and families. Call (872) 240-2639 or use the contact form.