Consistent Property Taxes

According to many owners, multifamily buildings are subject to erratic and unpredictable increases in property taxes. In some parts of Cook County, multifamily housing is overburdened with property taxes due to scarcity of other real estate value.

In 2008, Cook County began a phased reduction in assessment levels for multifamily rental properties. 2011 is the first year in which multifamily properties are assessed at the same level as all other residential buildings—10%.

Chicago’s Property Tax Increase

Most recently, the City of Chicago proposed property tax increases that will have an effect on affordable rental housing. Click here for a fact sheet.

Existing Property Tax Abatement. Housing Opportunity Tax Incentive Act (HOTIA) provides a property tax reduction to owners who provide rental housing through tenant-based or project-based vouchers in eligible, economically stable areas. Click here for a fact sheet.

Activities

The Preservation Compact convened a working group to identify ways to make the property tax system more fair and consistent for rental buildings.

Appeals. Owners of affordable multifamily rental properties should appeal their property taxes. The Assessor uses a market-based approach based on sales comparables to assess the value of a property. If an owner appeals, the Assessor can evaluate the income and expenses of the property and more accurately assess the value. The Preservation Compact created a guide to appeals for multifamily owners and created a list of consultants and attorneys who can help owners appeal.

Data analysis. Preliminary analysis of aggregate tax data by the Institute for Housing Studies found that multifamily rental has fared well during the phased decrease in assessment levels, and its share of property tax burden decreased slightly between 2006 and 2010.

Next Steps

Property Tax Relief for Rental. The Class 9 incentive program offered a reduced assessment level to owners who made improvements to their rental properties and agreed to offer affordable rents.  Under the new assessment structure, all residential buildings are assessed at 10% of market value, and Class 9 properties no longer receive the benefit of a reduced assessment level. A state legislative proposal is being developed by The Preservation Compact and a diverse group of stakeholders to provide tax relief for existing buildings that undergo rehab, and for new construction buildings that include affordable units.