Residential and Commercial Real Estate Taxation Appeals

While everyone expects to pay taxes - including on residential and commercial real estate - no one wants to pay more than they need to nor more than their fair share. This is where representation in the real estate taxation appeals area is important. First, some information on the real estate tax process in Illinois.

Assessments by the County

The county will assess all real estate within its boundaries at its existing use based on fee simple ownership in order to find the market value. Market value is defined as the most probably value which a property should bring in a competitive and open market under all condition requisite to a fair sale. This has been defined by the courts as "fair cash value" as being the amount the property would bring at a voluntary sale when the owner is ready, willing and able to sell but not compelled and the buyer is ready, willing and able to buy but not forced to do so.

This assessment is reduced by certain exemptions such as Homestead, Senior Freeze, Senior Citizen or disabled Veteran exemption. Certain real estate is exemption from taxation based on ownership such as charitable, religious or governmental.

Your actual tax comes about through the determination of tax levies and their presentation to the County clerk by each of the taxing bodies such as school and park districts as shown on your tax bill. The County clerk aggregates the rates and extends the tax rate to each parcel at the assessment provided by the County Board of Review to arrive at the actual tax.

The Tax Appeal Process:

The owner is required to receive notice of any changed assessment unless due to an equalizing factor applied by Illinois Department of Revenue. This notice will be by mail and notify you of the change and appeal rights. The appeal process starts when assessor has provided this notification. The four venues of appeal of your assessment are the local assessor, the County Board of Appeal, the State Property Tax Appeal Board and the Circuit Court.

The Local Assessor

Many local assessors are willing to discuss adjustments based on valid information provided them informally before the assessor has certified the assessments books to the board of review. The supervisor of assessments can also correct mistakes other than for valuation by what is called a certificate of error.

County Board of Review

The next level is the County Board of Review consisting of a 3 member panel. Each County Board will have its own forms and requirements which must be followed for the appeal. The appeal to the Board of Review is generally based on two overlapping reasons:

1. The assessment is higher than comparable assessments. It is your obligation to provide these comparables in the most detail possible. Obviously, you should look primarily in your neighborhood and for the same style of house as yours. Other factors are: lot size, year built, exterior construction, total living area not counting basement, general condition, number of bathrooms, finished and unfinished basement area, number of fireplaces, description of garage and prior sales. Pictures of your home are needed and pictures of the comparables are helpful. In computerized counties obtaining this information is not difficult, otherwise, it may require you going to the county assessor’s office with street addresses and requesting the property tax card and assessment figures for you to gather the information. 

2. The assessment is higher than one-third of market value as shown by an appraisal within 6 months or a recent sale at arms length. The courts have held that a recent sale is the best evidence of a property fair market value. Remember that the appraisal for assessment purposes is made at its "existing use" not the "highest and best use" standard for other appraisals.

You can elect to have your complaint heard on the documents submitted without your appearance and testimony. However, this can be a mistake. Your testimony as to the condition of your home and other detracting factors that reduce value will be helpful to your complaint. The assessor may have your home rated as "good" condition when in fact it should be "average." Additionally, if your complaint is based on a recent sale it is important to establish the arms length nature and fairness of the sale - in other words, that you did not get a good price because of some factor independent of value such as you are related to the seller.

State Property Tax Appeal Board

This Board hears appeals from County Board of Review decisions. These appeals are limited to market value questions or to unequal market value when compared to other similar properties.

Circuit Court

A Tax objection proceeding may be filed with the circuit court in lieu of the Property Tax Appeal Board. The tax objection route requires the owner to have first proceeded through the County Board of Review (as does the State Property Tax Appeal Board) and requires the payment of taxes in dispute unless in rare situations an injunction and declaratory relief is first obtained. Limited relief is also available under what is called Certiorari or Mandamus or under rare Federal remedies.

Venue Considerations

As a practical point, the first two options of informal contact with your assessor and a complaint with the County Board of Review are the main options open to most homeowner residential appeals. While appeals to the State Property Tax Appeal Board or a Tax objection through the Circuit court are available, these are major cases where in most residential appeals the amount of tax involved might not justify the cost of pursuing these last two options.

A major consideration of which of the last two venues to undertake - the State Property Tax Appeal Board or a Tax Objection through the Circuit clerk - is the standard of proof and the possibilities of decision options. The State Property Tax Appeal route is considered a de novo hearing which means the Board looks at the information fresh without given weight or deference to the County Board of Review decision. This also means the Board can not only refuse to lower your assessment but can raise it. Contrast this to the Tax Objection route where the court assumes the decision of the County Board of Review is correct and the owner must rebut that presumption by clear and convincing evidence. However, the Court will not increase taxes only maintain or reduce them.

Information on Appraisals

Appraisals are governed by standards established by the Uniform Standards of Professional Appraisal Practice and are a far more complicated process than most people realize especially for commercial property. While general appraisal valuation is at the land’s "highest and best use," for assessment purposes the appraisal is made at its existing use and value of real estate only and based on fee simple ownership in order to find Market value. Market value is defined as the most probably value which a property should bring in a competitive and open market under all condition requisite to a fair sale. Briefly, the approaches used to determine Market value are:

Cost approach: based on the replacement or reproduction cost of buildings along with the value of the land taking into account depreciation which can limit its use for assessment purposes but in the same light might be attractive if comparable sales show the same depreciation. It can be a complicated analysis and is best suited for commercial application but generally should not be used for assessment appeals unless there is no actual or potential market for the property.

Sales Comparison approach: This approach is the preferred and accepted manner of evaluation of property for assessment purposes. As the name implies this approach is based on comparable sales of property and may require complicated adjustments by the appraiser to take into account differences in the compared properties. The approach also includes a recent sale between parties dealing at arm’s length. The courts have held that a recent sale is the best evidence of a property fair market value.

Income Capitalization approach: valuation based on the present value of the expected future benefit to the owner from the property generally from income to be realized and sale proceeds. The actual rent may not be accepted by its fair market rent value. This is obviously a complicated assessment and as a result Board of Reviews often have specific rules for its use.