Could active-duty service members claim the Illinois property-tax credit when their Illinois home was the principal residence but legal domicile changed later?

Plain-English summary

The military couple qualified because the Illinois house was their actual principal residence. They moved into the home in 2006 while on active duty, owned it, lived there, and paid the property tax, even though their formal military residence remained elsewhere until retirement in 2010.

IDOR applied four requirements for the 2010 credit: an Illinois principal residence during 2009, ownership, personal residential use, and payment of the 2010 bill. All were met, so the denial was improper and the processing division was instructed to reinstate the credit.

What this means for you

Document actual principal-home use separately from military legal domicile. Preserve occupancy, ownership, and payment records for the relevant assessment and payment years.

Common questions

Q: Did out-of-state military domicile automatically bar the credit?
A: No.

Q: Was physical residence alone sufficient?
A: No. Ownership, qualifying property use, and payment were also required.

Citations and references

• 35 ILCS 5/208

Subject

Credits – Property Tax

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/income-tax/2011.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/income-tax/2011/it-11-0015.pdf

Original ruling text

IT 11-0015-GIL 07/28/2011 CREDITS – PROPERTY TAX
General Information Letter: Taxpayer whose principal residence is in Illinois is entitled
to the credit for property taxes paid on that residence, despite being a nonresident
because he or she is only present in Illinois pursuant to active duty military assignment.
July 28, 2011
Dear:
This is in response to your letter dated March 10, 2011 in which you state the following:
We have received a return correction notice regarding our Illinois state taxes. Our refund was
changed from $412 to $176 based on the issue of property tax. There are two explanations as
to why we are not eligible. We understand the first, “because we were not Illinois residents in
the prior tax year.” It is the second line that makes us question the validity, “if you moved into
Illinois during the tax year, you are not eligible for a property tax credit for this tax year.”
We were both active duty military when we moved to Illinois in 2006 and have been paying
property tax ever since. When we retired in 2010, we changed our residency to Illinois as we
own a home and work here. We were not legal residents for the entire year as far as the
military was concerned but we have been physical residents for years.
We spoke to George at the Illinois Department of Revenue and Roger at the Illinois Property
Tax Credit office. Both men told us that we are not eligible but neither can show us definitively
where in the regulations/publications our situation applies. We have reviewed Publication 108
and Section 208 but are unable to find anything that shows we are not eligible as physical
residents that have been paying property tax for 4 years. We were instructed to contact your
office for further clarification. Any assistance with this issue is greatly appreciated. A copy of
the correction notice is attached for your convenience.
According to the Department of Revenue (“Department”) regulations, the Department may issue only
two types of letter rulings: Private Letter Rulings (“PLR”) and General Information Letters (“GIL”).
The regulations explaining these two types of rulings issued by the Department can be found in 2
Ill.Adm.Code §1200, or on the website http://www.tax.illinois.gov/LegalInformation/regs/part1200.
Due to the nature of your inquiry and the information presented in your letter, we are required to
respond with a GIL. GILs are designed to provide background information on specific topics. GILs,
however, are not binding on the Department.
Section 208 of the Illinois Income Tax Act (“IITA”; 35 ILCS 5/101 et seq.) relates to the property tax
credit allowed for Illinois residents:
Sec. 208. Tax Credit for Residential Real Property Taxes.
Beginning with tax years ending on or after December 31, 1991, every individual taxpayer shall
be entitled to a tax credit equal to 5% of real property taxes paid by such taxpayer during the
taxable year on the principal residence of the taxpayer. …
Under the system of property taxation existing in Illinois, property taxes for a given taxable year are
due and payable during the following year. This is explained in the 2010 Schedule ICR IL-1040
Instructions on page 3 under the heading “Am I eligible for a property tax credit?” The answer reads:

IT 11-0015-GIL
July 28, 2011
Page 2

You may figure a credit for the Illinois property taxes you paid in 2010 on your principal
residence (not a vacation home or rental property) for the time you owned and lived at the
property during 2009, if that residence was in Illinois. Nonresidents of Illinois may not take this
credit.
There are four requirements for any taxpayer to receive an Illinois property tax credit on their 2010 IL1040:
1) Taxpayer’s principal residence during 2009 was in Illinois; and
2) Taxpayer owned the principal residence; and
3) Taxpayer’s tax bill included property used for the principal resident, yard, garage or other
structure used for personal purposes; and
4) Taxpayer’s property tax billed in 2010 has been paid.
Your letter indicates that all four requirements have been met. You state that while on military active
duty you moved to Illinois in 2006 when you began paying property taxes on the home you own. It
appears from your letter that your principal residence is in Illinois and has been since 2006. As a
result, the denial of your property tax credit was improper. I am sending a copy of this letter to Pam
XXXXX in our Individual Processing Division so she will know that your property tax credit should be
reinstated.
As stated above, this is a general information letter which does not constitute a statement of policy
that either applies, interprets or prescribes tax law. It is not binding on the Department. Should you
have additional questions, please do not hesitate to contact our office.
Sincerely,

Heidi Scott
Associate Counsel -- Income Tax