Single Family Home (Lake)<sup>1</sup>

Single Family Home
Over $1.6 Million in cumulative tax savings

Single Family Home (Lake)<sup>1</sup>

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Single Family Home (Lake)1

Highlights

Property Type: Single Family Home

Savings: Over $1.6 Million in cumulative tax savings

Location:  Lake County

Description:  10,311 square foot single-family home

Key Results:

  • Worked proactively with Assessor to control assessment of newly built $11 Million home
  • Caused home to be assessed for tax purposes substantially below cost to build new
  • Over $1.6 Million in tax savings since the home was built

The Challenge

Elliott & Associates represented the owner of a portfolio of commercial and industrial properties.  The owner was planning on constructing a custom home in Lake County scheduled to cost in excess of $11 Million.  The client was concerned his tax bill might be as much as $220,000 based on the rule-of-thumb that taxes are typically 2% of market value.  He asked Elliott & Associates for advice and assistance.

Our Approach

Prior experience suggested high-priced custom homes were typically undervalued by the Assessing officials.  Elliott suspected that surveying  comparable homes would confirm that assumption.

The Elliott team engaged a respected local appraiser to provide appraisal consulting services.   Elliott knew that  the subject would be one of the most valuable homes in the township and felt that it was important to review the 50 most valuable homes in the township in order to provide reasonable valuation benchmarks.

The analysis presented a range of assessed values on a per square foot basis for comparable homes. Adjustments were made for differences amongst the comparable properties.   Our team felt that we should approach the Assessor before he assessed the subject and negotiate what the home should be assessed at.  The client provided his consent and Elliott pursued negotiations with the Assessor.  Elliott suggested to the Assessor that the client’s new home would cost in the high millions, that the market value of highly priced homes are often less than cost, and that our client’s home should not be assessed based on cost, but on the actual assessments of comparable homes in the Township.

Results

Elliott presented the Assessor with assessments of the 50 most valuable homes in his township and suggested that the client’s home should be assessed at the high end of the range.  The Assessor agreed with the approach.  He valued the client’s home at about $2.2 Million, when it cost over $11 Million to build.   Taxes the first year (2005) were about $40,000.  Had the taxes been based on the cost to build of $11 Million, they could have been as high as $210,000 annually. Indicated annual tax savings were as much as $170,000.   The assessed market value of this home has remained under $2 Million since 2005, indicating a total 10-year tax savings of as much as $1.7 Million.