- Reduce Your Commercial Property Tax Assessment...and Save Money in the Process
- February 4, 2009 | Authors: Sonja R. Johnson; Scott L. David
- Law Firm: Much Shelist Denenberg Ament & Rubenstein, P.C. - Chicago Office
Owners of commercial real estate should recognize the importance of reviewing a property’s assessment both prior to and following acquisition, with the goal of ensuring that the assessment is not only accurate but also at the lowest level possible. If changes in economic circumstances occur, a review of your commercial properties could result in a reduction in the assessment and corresponding real estate taxes at a time you might need it most.
Errors and overvaluation of property often occur, and there is no downside to appealing an assessment in Cook County. The assessment will either be reduced or remain the same, but will not be increased as the result of an appeal. Property in Cook County is generally reassessed once every three years. However, arguments for a reduction in the assessment of a property can be made in any year if there is a change in the status of a property.
In the collar counties (DuPage, Kane, Lake, McHenry and Will), the Board of Review has the ability to both increase and decrease assessments at its discretion. For example, if a property had vacancy but also garnered a high purchase price, the Board might not only deny the vacancy relief but also increase the assessment. However, there would be no risk of an increase brought about by the filing of an appeal in the case of a property with a declining economic situation.
Things to Consider
When conducting an annual review of your commercial real estate assets, it is important to inform your attorney of any change in the condition of a particular property throughout the year. You should note such factors as the loss of a tenant, renegotiation of a lease resulting in a loss of revenue, vacancy of a portion of a property in the course of a year, unsold condominium units marketed by a developer, significant capital improvements or repairs made to a property, physical damage to a property, environmental issues, or a decline in overall market value warranting a lower appraised value of a property. Among others, these changes in condition may warrant an assessment appeal.
A foreclosure or a deed in lieu of foreclosure can also provide strong evidence of the deteriorating state of a property, with a declining economic situation and consequent decrease in market value. Furthermore, purchasing a property at a lower value than the Assessor's market value provides evidence of the over-valuation of a property at the time of the purchase, not just in a reassessment year.
It is important to remember that reductions in assessment are not automatic and require action on the owner’s part. Without your valuable input, your attorney will have no way of knowing that the condition of your real estate assets has changed.
What to Do Now
If you are the owner of one or more commercial properties, now is an ideal time to reevaluate those assets. Otherwise, you may miss an opportunity to reduce your operating expenses.