Real Estate Tax AppealsReal Estate Tax Appeals

Schoenberg Finkel Newman & Rosenberg, LLCSchoenberg Finkel Newman & Rosenberg, LLC

Home Sweet HomeHome Sweet Home -- --

As a buyer sees it --As a buyer sees it --

As a lender sees it --As a lender sees it --

As an appraiser sees it As an appraiser sees it ----

As the Assessor Sees it -- As the Assessor Sees it --

TAX =TAX = ASSESSED VALUEASSESSED VALUE

XX

EQUALIZATION EQUALIZATION FACTORFACTOR

XX

TAX RATETAX RATE

TAX =TAX = ASSESSED VALUEASSESSED VALUE

XX

EQUALIZATION EQUALIZATION FACTORFACTOR

XX

TAX RATETAX RATE

Equalization FactorEqualization Factor

Also called the Also called the “Multiplier”“Multiplier”

makes actual level of makes actual level of assessment 33% assessment 33%

based on sales ratio based on sales ratio studiesstudies

Transfer Tax DeclarationTransfer Tax Declaration

Illinois Department of Revenue Illinois Department of Revenue (IDOR) compares assessments to (IDOR) compares assessments to actual sales pricesactual sales prices

e.g. 333,333 assessed valuee.g. 333,333 assessed value÷ $1,000,000 sale÷ $1,000,000 sale== 33% assessment level33% assessment level

SO MULTIPLIER = 1SO MULTIPLIER = 1

If level of assessment too low, If level of assessment too low, (less than 33%)(less than 33%)

then multiplier > 1then multiplier > 1

If level of assessment too high, If level of assessment too high, (more than 33%)(more than 33%) then multiplier < 1then multiplier < 1

If level of assessment If level of assessment just rightjust right,,

(equals 33%)(equals 33%) then multiplier = 1then multiplier = 1

Tax Rate =Tax Rate =

tax levy tax levy ÷÷

Total Assessed Value of all Total Assessed Value of all property property

in tax districtin tax district

If you reduce your assessment, If you reduce your assessment,

Don’t Don’t brag !brag !

the tax burden if shifted to the tax burden if shifted to everyone else . . . everyone else . . .

PTELL – PTELL – 5% CAP ON TAX RATE 5% CAP ON TAX RATE INCREASESINCREASES

Property Property Tax Tax ExtensionExtensionLimitationLimitationlawlaw

Assessed Value =Assessed Value =33% of market value33% of market value

UnlessUnless . . . . . .

you live in you live in

Cook Cook CountyCounty

Cook CountyCook County is is

Special !Special ! Commercial propertyCommercial property

assessed value = assessed value =

25% of market value25% of market value

Residential / vacant propertyResidential / vacant propertyassessed value =assessed value =

10% of market value10% of market value

Illinois Illinois ConstitutionConstitutionIllinois Illinois ConstitutionConstitutionArticle IX – Article IX –

highest property highest property classificationclassification

Cannot exceed 2-1∕2 times Cannot exceed 2-1∕2 times lowest classificationlowest classification

(e.g. 10% x 2.5 = (e.g. 10% x 2.5 = 25%)25%)

Exemptions --Exemptions -- HomeownersHomeowners Senior CitizensSenior Citizens Senior FreezeSenior Freeze Home ImprovementHome Improvement Long-time homeownerLong-time homeowner Disabled personDisabled person Disabled VeteranDisabled Veteran Returning VeteranReturning Veteran

Lack of UniformityLack of Uniformity

Illinois Constitution Illinois Constitution Article IXArticle IX

-- Right to -- Right to

Uniformity of Uniformity of AssessmentAssessment

Assessment Equity Assessment Equity Comparison TableComparison Table

Address Age Class Area

(Sq. Ft.)Improvemen

t AV

MV of

building(Sq. Ft.)

Distance(miles)

09-21-404-030 1334 Lundergan Avenue 47 2-34 1,667 38,965 $146 1.17

09-22-111-004 1433 Good Avenue 47 2-34 1,585 37,668 $149 1.10

09-27-210-056 1701 Marvin Parkway 48 2-34 1,598 38,973 $152 0.36

09-27-211-017 807 Wilkinson Parkway 52 2-34 1,580 38,267 $153 0.02

09-26-116-040 640 N Greenwood Avenue 43 2-34 1,438 35,407 $154 0.65

09-27-211-016 809 Wilkinson Parkway 47 2-34 1,596 39,950 $156 0.02

Average           $152  

Subject Property

09-27-210-xxx Wilkinson Parkway 45 2-34 1,428 39,451 $173  

Sample Calculations --Sample Calculations --Sq. Ft. of Building:Sq. Ft. of Building: 1,428 1,428

Average ImprovementAverage ImprovementMarket Value of Comparables: Market Value of Comparables: x $ 152 x $ 152 per Sq. Ft. per Sq. Ft.

Correct Improvement Correct Improvement Market Value:Market Value: $ 217,056$ 217,056

– Rate of Assessment:Rate of Assessment: x 16 % x 16 %

Correct Improvement Correct Improvement – Assessment:Assessment: 34,729 34,729

Land Assessment: Land Assessment: + 9,621 + 9,621

Correct Total Assessment:Correct Total Assessment: 44,350 44,350

ValuationValuation

Cost ApproachCost ApproachIncome Capitalization Income Capitalization ApproachApproach

Sales Comparison Sales Comparison ApproachApproach

Income ApproachIncome Approach

Market Value =Market Value =

Net IncomeNet Income

÷ ÷

Capitalization RateCapitalization Rate

Sample Capitalization Sample Capitalization AnalysisAnalysis

$118,236$118,236 Potential Gross Income (PGI)Potential Gross Income (PGI)- 11,824- 11,824 Vacancy Factor (10% of PGI)Vacancy Factor (10% of PGI) 106,412106,412 Effective Gross Income (EGI)Effective Gross Income (EGI)- 42,648- 42,648 Average Expenses (40% of EGI)Average Expenses (40% of EGI) 63,76463,764 Net IncomeNet Income÷ .1368÷ .1368 9% Capitalization Rate plus tax load **9% Capitalization Rate plus tax load ** $466,111$466,111 Market ValueMarket Valuex 22%x 22% 102,544102,544 Assessed ValueAssessed Value

** tax load = (level of assessment)(tax rate)(multiplier)** tax load = (level of assessment)(tax rate)(multiplier)

Sales comparisonSales comparisono Proximity / LocationProximity / Locationo Style of ConstructionStyle of Constructiono Size (Above Ground Living Area)Size (Above Ground Living Area)o AgeAgeo Land AreaLand Areao FeaturesFeatures

o FireplacesFireplaceso Garage SpacesGarage Spaceso Pool Pool o Deck or Patio, etc.Deck or Patio, etc.

AppraisersAppraisers SRA (certified residential appraiser)SRA (certified residential appraiser) SRPA (more advanced appraiser)SRPA (more advanced appraiser) MAI (member of appraisal institute / MAI (member of appraisal institute /

highest demarcation)highest demarcation)

Appraisers are capable of adjusting Appraisers are capable of adjusting for differences between subject for differences between subject property and property and

comparable properties comparable properties

research tools:research tools:

Government websitesGovernment websites Assessor’s officeAssessor’s office Multiple Listing Service (MLS)Multiple Listing Service (MLS) Private websites (e.g. Zillow)Private websites (e.g. Zillow)

The Appeal The Appeal ProcessProcess Assessor Assessor Board of Review Board of Review

(aka Supervisor of (aka Supervisor of Assessments)Assessments)

Property Tax Appeal BoardProperty Tax Appeal Board Circuit CourtCircuit Court

Taxpayers Taxpayers Beware !Beware !• Board of Review appeals are Board of Review appeals are

generally due within 30 days of generally due within 30 days of notice of reassessmentnotice of reassessment

• By the time you receive your tax By the time you receive your tax bill bill

it is too late !it is too late !

Assessor Assessor QualificationsQualifications

Frankfort Township Frankfort Township Assessor:Assessor:

Joseph Kral, Joseph Kral, C.I.A.O.C.I.A.O.

CIAO !CIAO !

C.I.A.O.C.I.A.O. means meansCertified Illinois Certified Illinois Assessment OfficerAssessment Officer