Are You Overpaying Property Taxes on Your Mixed-Use Building?

Mixed-use properties are buildings that combine different types of space, such as a retail store on the ground floor with apartments above. These properties are common throughout Cook County, especially in busy commercial areas of Chicago and the surrounding suburbs. Mixed-use buildings offer great flexibility and income potential for owners, but when it comes to property tax assessments, they often get valued incorrectly. This can lead to higher taxes than the property should actually be paying.

Understanding why mixed-use assessments go wrong and what you can do about it is important if you own one of these properties. This blog explains the common assessment errors for mixed-use buildings and how a Cook County Property Tax Attorney can help you correct them.

What Makes Mixed-Use Properties Different

A mixed-use property combines different functions in a single building. It might include:

• Commercial space on the first floor, such as retail stores, restaurants, or offices
• Residential apartments on the upper floors
• Mixed residential and commercial units throughout the building
• Storage space or other uses

Because mixed-use properties serve multiple purposes, they don't fit neatly into a single category. The Cook County Assessor's Office uses different assessment levels for different property types. Residential properties are assessed at 10% of market value, while commercial properties are assessed at 25% of market value. This difference makes proper classification critical for mixed-use buildings.

Common Assessment Errors in Mixed-Use Properties

Here are the most common problems that lead to incorrect assessments for mixed-use buildings:

1. Improper Classification

The Assessor might classify your building incorrectly based on outdated or inaccurate information. For example, a building incorrectly split into separate residential and commercial classifications can substantially increase your taxes because the commercial portion gets taxed at a higher rate.

2. Wrong Income Assumptions

Commercial properties are often valued based on their income potential. If the Assessor assumes higher rental income than you actually receive or uses incorrect vacancy rates, it can inflate the value. For instance, if your ground-floor retail space is vacant or rented below market rate, the assessment should reflect that reality. Using outdated income data pushes the valuation too high.

3. Inaccurate Comparable Sales

Mixed-use buildings can be difficult to value because true comparable properties are rare. A building with retail below and apartments above may not match other recent sales in your area. If the Assessor uses comparables that aren't truly similar, your assessment can be significantly off target.

4. Incorrect Property Data

Errors in the property records maintained by the Assessor's Office can directly affect your valuation. Common data errors include:

• Wrong square footage for commercial or residential space
• Incorrect number of units listed
• Outdated building characteristics
• Misidentified uses or improvements

Even small data errors can result in thousands of dollars in overpayment over time.

5. Failure to Update After Changes

If you've converted commercial space to residential or vice versa, the Assessor's records may not reflect the change. Properties that have been renovated, reconfigured, or had uses change need to have their records updated. Without proper updates, you could be paying taxes on the wrong classification.

How These Errors Affect Your Property Taxes

When your assessed value is too high, your property taxes increase accordingly. Unlike single-family homes that are easier to value using comparable sales, mixed-use properties require more complex analysis. Incorrect data or classification can easily result in overvaluation.

You might not discover the mistake until you compare your assessment with similar properties or review the specific data the Assessor used. Once you receive your tax bill, it may be too late to correct the error for that year without filing a formal appeal.

How an Attorney Helps with Mixed-Use Appeals

The appeal process for mixed-use properties can be complex because you need to address both classification issues and valuation questions. Many property owners choose to work with an attorney who understands Cook County's specific rules. A property tax attorney can:

• Review your assessment and identify classification or data errors
• Gather and organize supporting evidence including income data and comparables
• Prepare a detailed appeal that addresses the unique aspects of mixed-use valuation
• File your appeal by the deadline and handle all communications with the Assessor's Office
• Represent you at Board of Review hearings if needed
• Pursue further appeals to the Property Tax Appeal Board when appropriate

Professional guidance doesn't guarantee a lower assessment, but it helps ensure your case is properly documented and presented. 

Protect Your Investment

Mixed-use properties are valuable assets that require careful property tax management. Paying too much in property taxes reduces your net income and can affect your ability to maintain the property or plan for the future. Catching assessment errors early and taking action can save you thousands of dollars every year.

Aaron Fox Law helps Cook County property owners with commercial and residential property tax appeals. With a no-win, no-fee approach, you only pay if your property taxes are successfully reduced.

To learn more or schedule a free consultation, visit Aaron Fox Law's property tax page for details on how the firm assists property owners throughout Cook County.

With the right guidance, you can work toward a fair assessment that accurately reflects your property's true value and protects your financial interests.