We have lived in a house in illionis since 1999, we pay the taxes every year agreed to by my wife's and her cussin. He owns the place. We have put 5000.00 dollars worth of work in this house, i.e. new floors new bathroom, painting every year. Now the house needs a new furnise and they want us to buy the house. It's a small 2 bedroom 880 sq. ft. this house needs more work new siding and floor in living room and so on. His wife says we are squatters because we don't pay rent. But we have paid the taxes for all these years.

I'm not sure what your question is? If the owners want to force you out they can certainly do so, as long as they follow the legal requirements for eviction of tenants (30 days notice as there is no formal lease here). If you want to argue that you now own the house due to "squatter's rights" that won't fly. There is no indication that the owner's have abandoned the property, and you've only been in the house 13 years (in Illinois the period for adverse possession is 20 years, or 7 years under color of title, which doesn't apply here). If the owner's wife calls you a "squatter" she is essentially saying that you are trespassers - but that doesn't fly either since they have been aware of your presence and have tacitly approved it, at least up to now. So again - you have rights as tenants but not as owners.

To protect yourself going forward you should draw up a written lease that grants you residence in exchange for paying real estate taxes. As for your paying the costs of capital improvements (new floors, furnace, siding etc) - you should not be paying for these items unless you are OK with making a gift to the owners.

Good advice, BTW there is no such thing as squatters rights in Illinois. Adverse possession or open and notorious possession does require you to be paying the taxes but there are several other requirements which you have not met.

...Iin Illinois the period for adverse possession is 20 years, or 7 years under color of title, which doesn't apply here. ...

We don't know whether it applies or not. OP, said his wife and her cousin agreed that OP and his wife could pay the taxes. But he didn't say whether they had some sort of a paper giving them, ostensibly, the right to move in. Such a paper, by the way, is what "color of title" means. Many people, lawyers included, confuse color of title with claim of right. In other words, for adverse possession to work, in most jurisdictions, one has to have at least a subjective belief that he or she has a claim of title.

If the owner is aware you are living there with his permission then adverse possession will likely not apply.

I believe "color of title" applies only if there is a document that purports to transfer ownership to the OP, but due to some defect in the document is not legally enforceable. There's no mention of such a document here, and in fact the owner's wife calling them squatters makes it clear that they haven't attempted to transfer ownership. My understanding is that even if there had been a written lease that gives them the right to move in exchange for paying taxes that wouldn't be intended to transfer ownership - hence no color of title.

Ok, so move, if you have lived there 13 years for 5000 dollars plus taxes you have had a sweet deal and should have been able to save up lots of money?

But if the house is such a dump, you should be glad to move ?

You don't expect them to pay for repairs if you are not paying rent ?

You are a resident, maybe even considered a renter ( you don't have to actually pay rent to be a renter, just upkeep could be considered payment)

So what is wrong with buying the house, You certainly don't expect the owners to fix anything do you ?