How to Appeal Illinois Commercial Property Taxes

A major expense for most commercial landlords and tenants is property taxes. In Illinois, the commercial property tax is based on two things — the tax rate imposed by the county or township, and the assessed “fair market value” of the property. If you believe the latter is too high, you can appeal your building’s assessment.

What is “Fair Market Value”?

First, let’s understand how the assessment process works. County officials assess fair market value (FMV) based on one of three methods:

• an analysis of the actual sales prices for similar properties in the area;
• the cost to rebuild the property plus the value of the underlying land; or
• an estimate of the future income an investor would expect to receive from the property.

In most Illinois counties, commercial property values are reassessed every four years. (In Cook County, it is every three years.) The actual property tax is then based on a percentage of the assessed value, which is normally 33.3% outside of Cook County.

Proceedings Before the PTAB

If a commercial taxpayer wishes to dispute a reassessment of a property’s fair market value, the first step is to file a local appeal with either the local assessor or a county board of review. Once the local appeals board has ruled, the taxpayer then has 30 days to pursue further action by filing a petition with the Illinois Property Tax Appeal Board (PTAB).

There are many reasons why a commercial taxpayer may wish to pursue an appeal. For example, the assessment may have been based on incorrect data about the property itself. Alternatively, the local assessor may have valued similar properties in the area at a significantly lower value. Or in the case of a property that produces income, there may be a higher-than-normal vacancy rate that should have been taken into consideration.

Whatever the reason, once a commercial taxpayer appeals to the PTAB, the next step is typically to obtain an independent appraisal of the property. An appraiser can offer expert opinions with respect to the fair market value of a property as of the relevant assessment debate. Keep in mind, however, that the PTAB will want to hear in-person testimony from the appraiser and details of their analysis. A mere opinion letter that is unsupported by data will not be given much weight by the PTAB.

If the PTAB agrees with the commercial taxpayer, it can reassess the property’s value for the duration of the relevant assessment period. However, if the owner later sells the property in an arm’s length transaction, the “fair cash value” of the sale may lead to further reassessment. Also note that the county board may itself seek judicial review of a PTAB order lowering the assessed value of a commercial property.

Get Advice from a Lake County Real Estate Lawyer

If you are contemplating a property tax appeal to the PTAB, you need to work with a qualified Lake County real estate attorney who understands the law in this area. Contact the offices of Johnston Tomei Lenczycki & Goldberg LLC today at (847) 549-0600 or email us at info@lawjtlg.com to schedule a free consultation.