Commercial vs. residential property tax assessments

On Behalf of | May 6, 2022 | property tax appeals | 0 comments

Real estate tax assessments generally rely on each property’s current fair market value. When Illinois homeowners find increases on their property tax assessments, they may appeal them. Commercial property owners may also appeal their assessments.

As noted by Crain’s Chicago Business, assessments on residential property values reflect sales prices of comparable homes. Similar homes in a neighborhood may lead to an assessment proportional to each property’s current market value. Commercial property tax assessments require a more detailed analysis. Officials may assess taxes based on how much income a commercial property could generate.

Commercial property appraisals and assessments

Commercial properties located in the same neighborhood may not have similar revenue-producing capabilities. The Cook County Assessor’s Office notes that commercial property assessments also reflect mass appraisal values. Local tax officials may assess rental properties based on an average of the income generated among dwelling units.

Assessments may take into consideration vacancies and expenses required to meet housing codes. Cook County applies assessments of 10% for apartment buildings and residential properties. The county applies a 25% assessment for other commercial property types.

Residential property tax increases and appeals

When business owners appeal commercial property taxes, it could result in shifting their tax burden to homeowners. Faced with higher residential property taxes, homeowners may appeal.

Kiplinger’s Personal Finance reports that 20% to 40% of appeal cases result in homeowners paying lower taxes. Comparing property cards may reveal how a home’s assessment may differ from other similar properties. Listings of recent property sales in a neighborhood may provide the needed details. The information found may show whether an assessment accurately reflects fair market value.

As noted by the Illinois.gov website, Cook County tax officials perform general assessments of residential properties once during a three-year period. If an increase seems out of proportion with a home’s current market value, property owners may appeal.