APPEALING COMMERCIAL PROPERTY TAXES
If your company owns or rents commercial properties, you may be overlooking a relatively easy way to save money: By appealing your commercial property taxes. A real estate lawyer can guide you through the process of appealing property taxes in Cook County, DuPage County, Kane County, Lake County, McHenry County, Will County or elsewhere in the Chicagoland area.
Commercial Property Tax Basics
Whether you own or rent an office building, retail space, warehouse, apartment building or other commercial real estate, your real estate taxes are probably a significant line item. A property tax appeal enables you to reduce your real estate-related expenses without any degradation in the quality of services and amenities available to those who use the space.
When calculating property taxes, the local tax assessor determines the fair market value (FMV) of each property within the assessor’s purview. In Cook County, the assessor oversees the entire county. In other Illinois counties, assessments may be done on a county, multi-township or township level. The FMV is determined by one of three methods:
- Analyzing market data showing the sale price of similar nearby properties that have recently been sold
- Calculating the cost to rebuild the property, then adding the value of the land
- If the property is income producing, estimating the future net income an investor could expect to receive
In Cook County, property values are reassessed every three years, while other Illinois property is reassessed every four years. The city of Chicago is being reassessed in 2015, the northern suburbs will be reassessed in 2016 and the south suburbs will be reassessed in 2017.
Once the assessor has determined the FMV, that amount is then multiplied by the assessment percentage, resulting in the assessed value. The assessed value is then multiplied by the equalization factor, which is intended to bring some uniformity to valuations in different geographic areas. The result is the equalized assessed value, or EAV. This is the value that is used to calculate property taxes.
Appealing Commercial Property Taxes
Most commercial property owners (and tenants, where the tenant has a triple net lease that makes the tenant responsible for paying property taxes) opt to hire a real estate lawyer to appeal their property taxes every three to four years when the property value is reassessed. You’ll certainly want to appeal if:
- The appraisal was based on incorrect information about the building, such as the wrong age or square footage
- Similar properties in the area were appraised at lower rates
- The building is an income-producing property with a high vacancy rate or has cash-flow problems
- Your company is planning to sell or lease the commercial property and the property taxes may discourage some buyers or tenants
- Your company recently purchased or leased the property and the prior owner or tenant never appealed the property taxes
Unless your company has knowledgeable staff with experience handling commercial property tax appeals, you should hire a real estate attorney to guide you through the commercial property tax appeals process.
Your property tax appeals attorney should be well-versed in the appeals process, and have the appropriate knowledge to analyze your property’s assessment and craft a convincing appeal. Your lawyer should be familiar with the various government entities that hear property tax appeals. These can include the county or township Assessor’s Office, the county Board of Review, the county Circuit Court, the Illinois Department of Revenue and the Illinois Property Tax Appeal Board.
The appeals process typically begins at the county Board of Review. (For property located in Cook County, the appeal can be filed with either the Cook County Assessor’s Office or the Cook County Board of Review.) If taxpayers are unhappy with the Board of Review’s decision, then your lawyer can file a petition for appeal with the Illinois Property Tax Appeal Board.
It’s important to note that accountants, real estate consultants, tax representatives and others may advertise their property tax appeals services. However, only licensed attorneys are able to represent taxpayers at hearings before the Illinois Property Tax Appeal Board, or at appeals cases that ultimately end up in the courts.
Contact the Commercial Real Estate Lawyers at Waltz, Palmer & Dawson
Whether you own industrial property, commercial real estate, apartment complexes, hotels, hospitals or a real estate owned (REO) portfolio, the real estate lawyers at Waltz, Palmer & Dawson LLC can counsel your company the legal issues related to commercial real estate ownership and tenancy. Should you have questions regarding property tax appeals, purchase and sales agreements, leases, property management agreements, brokerage agreements and other types of real estate transactions, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.