Property owners are receiving reassessment notices with increases of 200% or even 300% on commercial property and apartment buildings. Even those who planned for the reassessment this year never imagined increases on this scale and do not know how to budget for the potential tax increase. As an attorney who contests property tax assessments, I have been hearing a lot from taxpayers this year.
Townships in the north and west regions of Cook County are being reassessed in 2019 as part of the triennial reassessment cycle. All other counties in the state are also being reassessed this year on the four-year (quadrennial) reassessment cycle. It is imperative that taxpayers watch for reassessment notices because appeals must be filed within 30 days of publication. By the time a tax bill is received, it is generally too late to contest the assessment for that tax year. In Cook County, the assessor and the Board of Review each have a formal appeal process. So, if a taxpayer misses the opportunity to appeal to the assessor, there is another opportunity to appeal to the Board of Review. In other counties, appeals must be filed to the Board of Review within 30 days of the assessment notice. Filing an assessment appeal to the Board of Review is a prerequisite to appeals to the Illinois Property Tax Appeal Board or the Circuit Court, so if a taxpayer misses the Board of Review deadline, the right to further appeals is lost.
Illinois already has the highest property taxes of any state except New Jersey. So, when property owners see their assessments double or triple, they have good reason for concern. The new Cook County Assessor, Fritz Kaegi, believes that commercial property in Cook County is under-assessed and is imposing assessment increases the likes of which some taxpayers have never seen. Assessors in other counties will soon begin to issue their own reassessment notices.
As if assessments and taxes are not enough to worry about, the Cook County Assessor is promoting legislation that will require owners of income producing property to turn over their financial records and tax returns every year — even if they do not file assessment appeals. Failure to comply would result in financial penalties. The proposed legislation would affect not only taxpayers in Cook County, but throughout the state of Illinois. The Cook County Assessor wants the financial records of taxpayers to help assess real estate. The value of most income producing property is determined by a process called capitalization. Essentially, the net income from real estate is divided by a capitalization rate to calculate the market value. The capitalization rate reflects various factors, including mortgage interest rates and the percentage return on investment.
The most important information for taxpayers is the fact that assessments are not “set in stone.” The amount of real estate that assessors must value is enormous, so they often rely on mass assessment methods. If taxpayers provide specific evidence of the actual net income of commercial real estate or the sales prices of comparable properties, it is possible to prove that real estate is overvalued. Most assessment agencies will also give temporary relief when vacancy rates are unusually high.
The uncertainty about assessments and taxes is a problem in itself. Homeowners do not know how much money to put aside for taxes or whether they will be able to afford the taxes on a new home. Commercial property owners and tenants are also left guessing. At the same time, investors cannot know whether real estate will be profitable and may refrain from investing in Illinois and, in particular, Cook County. Economists tell us that this uncertainty may have a chilling effect on the economy as a whole.
• Terry Nader is a partner at Chicago-based law firm Schoenberg Finkel Newman & Rosenberg.
, where he brings his experience as a litigation attorney to the business litigation and real estate tax reduction practices.
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