Why Property Owners Should Invest in an Appraisal for Property Tax Appeals

As a property owner, you may wonder why I often recommend obtaining an appraisal when considering a real estate tax appeal for your owner-occupied property. This is particularly important if you operate a business from the property. Here are three compelling reasons why securing an appraisal is essential for a successful tax appeal.

1. Compliance with Requirements

Assessing officials and hearing officers at the Assessor’s Office, the Board of Review, the Property Tax Appeal Board (PTAB) and judges in the Circuit Court, all require a recent appraisal to establish the market value of your property as of the tax year in question. An accurate and professionally conducted appraisal serves as credible evidence to support your case, ensuring that you meet the procedural requirements of the appeal process.

2. Comprehensive Valuation Approaches

Property valuation is not a one-size-fits-all process; there are multiple methodologies that appraisers use to determine a property’s worth:

• Cost Approach: This method assesses the value of the land and improvements, accounting for depreciation—especially relevant for newer properties.
• Income Approach: Here, the focus is on potential income as a basis for factoring the value of a piece of real estate. Appraisers consider what a reasonable lease rate would be for your space, comparing it with similar properties in the area.  Then, the projected income, less expenses related to the operation of the property, creates a “net operating income” which is then “capitalized”, which is the process of converting an expected income into an indicator of market value.
• Sales Comparison Approach: This approach involves analyzing recent “arm’s-length” sales of comparable properties. Appraisers adjust the sale prices (both upward and downward) based on differences in characteristics such as age, location, size, etc. to arrive at a fair market value for your property.

By employing these diverse valuation techniques, an appraisal provides a well-rounded assessment of your property’s true worth.

3. Uncovering Discrepancies

An appraisal can reveal critical differences between the characteristics listed in your property’s record card and the actual attributes observed during an in-person inspection. Such discrepancies can significantly impact the assessed value of your property. Highlighting these differences through a professional appraisal can strengthen your appeal and demonstrate to the assessing authorities that your property has been overvalued. 

Conclusion

Investing in a property appraisal for a tax appeal is not merely a formality; it is a strategic move that can yield significant financial benefits. By providing a solid foundation of evidence, utilizing multiple valuation methods, and identifying discrepancies, an appraisal can enhance your chances of successfully reducing your property tax burden. If you’re serious about appealing your property taxes, securing an appraisal is an essential first step.