Quick Answer
Assessors set value with three approaches — sales comparison, cost, and income — then apply a level of assessment and equalization. The State trains each method, and each carries a failure point: bad comps, stale depreciation, aggressive income, or a non-uniform level. Those failure points are your appeal openings.
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The assessor's number is not a verdict. It is the output of a method — a method the State of Illinois teaches in writing, in the same manuals every Chief County Assessment Officer, township assessor, and Board of Review member studies to hold office. The Illinois Department of Revenue (IDOR) distributes those assessment manuals and provides the assessment training to local officials. Read the doctrine carefully and a quiet truth surfaces: every approach to value the State endorses carries an embedded assumption, and every assumption is a place an over-assessment can hide.
This is a practitioner reference for the firm that litigates and negotiates assessments — written from the assessor's own playbook, then turned around to show where the playbook leaves the door open. We are not here to hedge. An inflated assessment quietly inflates the bill every year it stands, and the owner pays it on autopilot until someone with the method in hand challenges the number. That someone is counsel. This guide is the field manual.
Everything technical below is drawn from IDOR's assessor-training material — *Introduction to Residential Assessment Practices* (PTAX-1-A) and the Department's *Glossaries and Formulas* for land valuation, math for assessing officials, and sales-ratio studies — except for two clearly marked Cook County numbers (the class assessment percentages and the year's equalization multiplier), which come from county and IDOR certification records outside the training corpus and are flagged in the body where they appear. We quote and paraphrase the State's doctrine faithfully. The strategic framing — where the method bends — is ours.
What "Value" Means Before Any Method Runs
Start where the manuals start. Most real property in Illinois must be assessed on its value in the open market, and the State defines **market value** as "the most probable sale price of a property in terms of money in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale, and assuming that the price is not affected by undue stimulus."
Two principles sit underneath all three approaches. The **principle of substitution** holds that a buyer is not justified in paying more for a property than it would cost to acquire an equally desirable substitute. And before value is even estimated, the **highest and best use** must be determined — "that use that will produce the highest net return to the land for a given period of time, within the limits of those uses which are economically feasible, probable, and legally permissible." A property has its highest value at its highest and best use; a property's highest and best use is generally, but not always, its current use.
Why does this matter to counsel? Because the assessment is, per the Property Tax Code, "the basis for determining what portion of the total tax burden each property owner as of January 1 will bear." The owner is appealing the **assessed value**, not the tax bill — and as the State puts it, "Tax rates are not an issue in the appeal process, only the amount of the assessment." If the method produced the wrong value, the bill is wrong, and it stays wrong until the value is corrected.
The determination of market value is the assessor's job, and the State says assessors "use one or more of the following three basic approaches": sales comparison, cost, and income. We take them in turn.
Approach One: Sales Comparison (Market Approach)
What the method does
The **sales comparison, or market, approach** is, in the State's words, "calculating the value of properties by observing and analyzing the selling prices of comparable properties." It is the most intuitive approach — it leans directly on the principle of substitution — and it is the workhorse for residential property. The assessor identifies recently sold properties similar to the subject (**comparables**, or "recently sold properties that are similar in many aspects to a property being appraised"), then adjusts for differences.
Note the State's own land-valuation doctrine here: even in the cost approach, "the land value is usually estimated by using the sales comparison, or market approach." So comps are load-bearing far beyond residential resale analysis. The **units of comparison** the State teaches — front foot, square foot, and site value — are how raw sale prices get normalized into a per-unit value indicator.
The appeal opening it creates: bad comps
The method is only as good as the comparables feeding it, and the State's own list of valid appeal grounds names the failure points directly. A formal complaint may be filed where:
- "The assessor's market value is higher than the actual market value" — supportable, the State says, "if the property has recently been purchased on the open market or if a professional appraisal is supplied."
- "The assessment is higher than those of similar neighboring properties."
That is the bad-comp opening in the State's own language. The comparables the assessor relied on may not be comparable — wrong condition, wrong size, wrong submarket, or sales that fail the **arm's-length** test the State defines as "a sale between two parties, neither of whom is related to or under abnormal pressure from the other." A distressed sale, an intra-family transfer, or a stale comparable is not a clean indicator of market value, yet it can sit inside the assessor's mass-appraisal output unexamined.
For counsel, the move is to rebuild the comp set on the firm's terms: pull genuinely comparable, genuinely arm's-length sales, photograph and document the subject's true condition, and present, as the State's evidence checklist recommends, "a list of recent sales of comparable properties, including photographs, PRCs, and evidence of the sale prices." When the better comp set produces a lower indication of value, the bad-comp assessment is exposed — not as a guarantee of any outcome, but as a documented, method-grounded challenge.
Approach Two: Cost (Land + RCN − Depreciation)
What the method does
The **cost approach** is the State's structural method, and it is governed by one formula that every assessor learns verbatim:
**Market Value = Land Value + (Replacement Cost New − Depreciation)**
The State defines it as "estimating the value of land as vacant and then estimating the depreciated cost of replacing the improvement." Three moving parts, each independently attackable:
- **Land Value** — "usually estimated by using the sales comparison, or market approach," by comparing the subject site with sales of comparable vacant sites. (Note: per the State, *land does not depreciate.*)
- **Replacement Cost New (RCN)** — "the current cost of constructing improvements having utility equal to that of the subject improvements." The State distinguishes replacement cost (a substitute of equal utility) from reproduction cost (an exact replica), and adjusts the manual's cost (MRCN) by a **cost factor** — "used to adjust the cost schedules for differences in local construction labor and material rates" — to arrive at true RCN.
- **Depreciation** — "loss of value from any cause." The State recognizes three types: **physical depreciation** (wear and tear, use and abuse, action of the elements), **functional obsolescence** (poor design, excessive frills), and **economic (external) obsolescence** (factors outside the property). Depreciation can be **curable** (where "the cost to cure will add to the market value") or **incurable** (where the cost to cure exceeds the gain).
Depreciation in the manuals is tied to **effective age** — "the age of an improvement based on the improvement's CDU rating" (condition, desirability, utility) — which "does not always equal actual age," and to **remaining economic life (REL)**, where the State's identity is plain: **%REL + %Depreciation = 100% of market value.**
The appeal opening it creates: stale cost and under-counted depreciation
The cost formula has two soft joints, and both favor over-assessment when neglected.
**Stale RCN.** Cost schedules and cost factors drift. If the manual's replacement cost or the local cost factor is out of date — or if the assessor applied a reproduction-cost figure where a lower-utility replacement was the right standard — RCN comes in high, and the whole number with it.
**Under-counted depreciation.** This is the richer opening. Mass appraisal applies *normal* age depreciation; it does not, on its own, see the functional obsolescence of a dated floor plan or the economic obsolescence of an external nuisance. The State's CDU rating exists precisely to "modify the normal age depreciation of an improvement according to the appraiser's determination of the improvement's condition, desirability, and utility" — but it only modifies the number if someone documents the condition. If the subject's effective age is older than its actual age, or if curable and incurable defects went uncounted, the depreciation deduction is too small and the assessment too large.
Counsel's leverage here is documentary and specific. The State's own evidence list invites "a photograph of elements detracting from the value of the property not shown on the [property record card] and an estimate, in terms of dollars, of their negative effect on the market value." That is an explicit instruction to monetize functional and economic obsolescence the assessor's schedules missed. A property record card showing a too-young effective age, an external obsolescence the CDU never captured, or a cost factor that no longer matches local construction costs — each is a method-grounded crack in the cost number.
Approach Three: Income (IRV)
What the method does
The **income approach** values income-producing property by, in the State's words, "calculating the present worth of the income from an income-producing property." Its engine is **capitalization** — "a mathematical process for converting the net income produced by a property into an indication of value" — expressed in the **IRV formula**:
**V = I ÷ R** — Value equals Income divided by Rate.
The State lays this out as a memory-device box, **I over R**, where I is net operating income and R is the capitalization rate; the formula has two independent inputs, not three. The income figure is not gross rent. The State builds **Net Operating Income** through a disciplined waterfall:
Potential Gross Income (100% capacity at economic rent)
− Vacancy & Collection Loss
+ Miscellaneous Income
= **Effective Gross Income**
− Allowable Expenses
− Reserve for Replacement
= **Net Operating Income**
And the State is explicit about what does *not* count: for assessment purposes, "depreciation, mortgage interest, and property taxes are not allowable expenses." The **capitalization rate (R)** is itself a stack — for a building, the discount rate (return *on* investment), the recapture rate (return *of* investment, tied to remaining economic life), and the effective tax rate. The recapture rate, under straight-line depreciation, the State calculates by "dividing 100 (percent) by the REL of the building."
The **effective tax rate** folded into R is a specific quantity: "found by multiplying the level of assessments by the current local (aggregate) tax rate," applied to full market value.
The appeal opening it creates: aggressive income assumptions
Every input in that waterfall is an assumption, and assumptions can be aggressive. The income approach is where an over-assessment hides behind a spreadsheet that *looks* rigorous. The openings, each grounded in the State's own definition of the term:
- **Potential Gross Income inflated.** PGI is income "if 100% occupied, based on market standards." If the assessor used asking rents instead of achievable economic rent, PGI is overstated from the first line.
- **Vacancy and collection loss understated.** Effective Gross Income is "potential gross income minus vacancy and credit plus any miscellaneous income." A vacancy allowance below the property's real, sustained experience pushes EGI — and value — up.
- **Expenses and reserves under-counted.** Net Income is "effective gross income minus allowable expenses and reserves for replacement." Thin operating expenses or a missing reserve for replacement (the State's pro-rated allowance for items like roof and carpet) inflate NOI directly.
- **Cap rate too low.** Because V = I ÷ R, a capitalization rate set too low *multiplies* the value. If the recapture rate doesn't reflect the building's true remaining economic life, or the rate stack ignores risk the market prices in, the divisor shrinks and the assessed value balloons.
For counsel handling commercial, multifamily, or other income property, the work is to reconstruct the income statement on real, defensible figures — actual economic rent, the property's true vacancy history, complete operating expenses and reserves, and a market-supported cap rate — and to hold the assessor's pro forma against the State's own definitions of each input. (Income property is overwhelmingly entity-owned, which carries representation consequences we address below.)
The Number Behind the Number: Level of Assessment and Equalization
Knowing market value is only half the assessment. The State applies a **level of assessment** to that value, and the levels are not uniform across property classes.
The **assessed value** is, per the State, "the value placed upon property after multiplying its market value by the level of assessment." Statewide, the statutory level is one-third — 33 1/3 percent of market value, unless set otherwise by law. Cook County is one of the jurisdictions that sets it otherwise: under the **Cook County classification ordinance** (a county-level rule, not part of the IDOR training manuals), property is assessed at different percentages by class — for example, Class 2 residential at 10% of market value and Class 5 commercial and industrial at 25%. Treat those class percentages as a county ordinance figure and confirm the current ordinance before relying on them. Classification itself, the State explains in the training glossary, exists "to tax various kinds of property at different effective tax rates though the nominal rate is the same."
Then comes **equalization** — "the application of a uniform percentage increase or decrease to assessed values of various areas or classes of property to bring assessment levels, on the average, to a uniform level of market value." The instrument is the **equalization factor** (the "multiplier"), and the State's formula is exact:
**Equalization Factor = Desired Level (33.33%) ÷ Prior 3-Year Average Median Level**
Multiply assessed value by the equalization factor and you get **Equalized Assessed Value (EAV)** — the value, after qualified homestead exemptions are removed, from which the tax rate is actually computed. The multiplier is a per-county, per-year certified figure: for the **2024 tax year of record**, IDOR's final certified Cook County multiplier was **3.0355** (a figure from IDOR's annual multiplier certification, external to the training manuals quoted elsewhere here). Multipliers, class percentages, and deadlines are jurisdiction- and year-specific — always verify the current certified figure before you rely on it.
The appeal opening it creates: a non-uniform level
Here is the appeal ground that has nothing to do with whether the assessor's market value is right and everything to do with **fairness across the roll.** The State lists it among the valid bases for a formal complaint: "The assessed value is at a higher percentage of market value for the property than the prevailing township or county median level, as shown in an assessment/sales ratio study."
That is the uniformity claim, and it is grounded in the most fundamental principle in the manuals. The State calls **assessment uniformity** — "the degree to which different properties are assessed at equal percentages of Market Value" — "the foundation of Assessment practices." The Board of Review's own statutory charge (Section 16-55) is that "in no case shall the property be assessed at a higher percentage of fair cash value than other property in the assessment district." Over-assessment relative to peers is, by the State's own standard, a correctable wrong.
Uniformity as a Measurable Standard: The Sales Ratio and the Coefficient of Dispersion
Uniformity is not a feeling. The State teaches it as statistics, and counsel who speak that language argue on the assessor's home field.
The **sales ratio study** is "an analysis of the percentage relationship of assessed value (AV) to market value," and the State requires a "minimum of 25 useable sales/appraisals." The per-sale ratio is:
**Sales Ratio = (Prior Year Assessed Value ÷ Current Year Sale Price) × 100%**
The **level of assessments** is simply "the ratio of assessed value to the sale price" — the median of those ratios tells you where a township or class is actually being assessed, regardless of where the statutory level says it should be.
Then the measure that matters most for a uniformity argument: the **Coefficient of Dispersion (COD)**. The State defines it as "a statistical measure of variation of individual assessment ratios around the median level of assessments (an average error expressed as a percent)" and calls it "the most common method used in measuring assessment uniformity." The formula:
**COD = (Average Deviation ÷ Median) × 100%**
A low COD means ratios cluster tightly around the median — assessments are uniform. A high COD means they scatter — some properties carry a heavier share of the burden than others assessed at the same supposed level. The State offers companion measures too: the **Coefficient of Concentration** ("the percentage of observations falling within 10% of the median level of assessments; a high COC indicates more uniformity") and the **Price-Related Differential**, which "measures a pattern of inequity in assessments related to the value of property."
For the firm, the COD is the bridge from a single property to a systemic argument. When the subject's sales ratio sits well above the median level — and when the COD shows the district isn't uniformly assessed — the uniformity ground stops being rhetoric and becomes a measured, documented standard the Board is statutorily obligated to honor. This is the appeal that survives even when the assessor's market value is arguably defensible: the property may be valued plausibly in isolation yet still be over-assessed *relative to its neighbors*, and that, by the State's own foundation, is enough.
The Method, Mapped to the Motion
Pull the four openings together and you have a working triage for any book of property:
| Approach the assessor used | Embedded assumption | The appeal opening | Evidence the State itself invites | |---|---|---|---| | Sales comparison | The comparables are truly comparable and arm's-length | Bad comps; non-comparable or distressed sales | Recent comparable sales with photos, PRCs, sale-price evidence | | Cost | RCN and depreciation are current and complete | Stale cost factor; under-counted functional/economic obsolescence | PRC showing effective age; photos of value-detracting elements with a dollar estimate | | Income (IRV) | PGI, vacancy, expenses, and cap rate are market-real | Aggressive income assumptions; cap rate too low | Actual rent roll, true vacancy, full expenses/reserves, market cap rate | | Level / equalization | The property is assessed at the same percentage as its peers | Non-uniform level | Sales-ratio study; COD showing the district isn't uniform |
None of these is a promise of a result. Each is a method-grounded reason to review — and the firm that runs this triage across an entire book, before the assessment notices land, is the firm that knows which parcels are worth the motion and which are not.
A Word on Representation — and Who Belongs at the Board
The appeal mechanics are statutory. The owner appeals the assessed value, not the bill; the informal path runs through the local assessing official, and the formal path runs to the county Board of Review, with onward review to the **Property Tax Appeal Board (PTAB)** — "the highest state quasi-judicial body which hears appeals from taxpayers and taxing bodies" — or a tax-objection complaint in circuit court.
One real-world rule sits outside the IDOR training manuals but shapes who can stand at the Board: Board of Review rules in many jurisdictions — including Cook County — require that corporations, LLCs, and similarly organized entities be represented by a licensed attorney rather than by a non-attorney officer or employee. The specifics vary by board and by entity form, so confirm the current rules of the board where the property sits. As a practical matter, this is a place for the firm, not for an entity owner improvising. Income property is overwhelmingly entity-held, which means the income-approach openings above are frequently attorney work from the start. And even individual owners are well served by counsel who can marshal the sales-ratio and COD arguments the State's own doctrine rewards.
Where Censum Fits
Censum knows the State's method cold — and we built the rails so your firm can run the work at scale without rebuilding any of it.
We are not your co-counsel and we are not the county. **Censum is independent property-tax intelligence and the filing rails your firm files on under its own code.** The firm remains counsel of record; Censum is the Merchant of Record for the platform — never counsel, never the assessor, never the taxing body. Pricing is flat and per-seat, never a percentage of any result. The intelligence layer maps your book against the assessor's own method — which parcels show a sales ratio above the median level, which carry effective ages that don't match actual condition, which income assumptions look aggressive against market — so your attorneys spend their hours on the motions that earn them, not on triage.
The method above is the assessor's. The rails are ours. The judgment stays with your firm.
**Map your 2026 book in Censum Docket →**
FAQ
Q: What are the three approaches to value, and which does the assessor use?
The State teaches three: the **sales comparison (market) approach** — "calculating the value of properties by observing and analyzing the selling prices of comparable properties"; the **cost approach** — Land Value + (Replacement Cost New − Depreciation) = Market Value; and the **income approach** — capitalizing the property's net income via V = I ÷ R. Per IDOR, assessors "use one or more" of these. Sales comparison dominates residential; cost is the structural method; income governs income-producing property. The State notes the income approach, while an option for residential, is "not the recommended approach" for residential.
Q: What is the Coefficient of Dispersion and why does it matter to an appeal?
The COD is, per IDOR, "a statistical measure of variation of individual assessment ratios around the median level of assessments" — "the most common method used in measuring assessment uniformity." It's calculated as (Average Deviation ÷ Median) × 100%. A high COD means assessments scatter rather than cluster, signaling the district isn't uniformly assessed. Because the State calls uniformity "the foundation of Assessment practices," and because the Board may not assess a property at a higher percentage of value than its peers, the COD turns a uniformity claim from rhetoric into a measured standard.
Q: How does the cost approach create an appeal opening?
The formula is Market Value = Land Value + (RCN − Depreciation). Two soft joints: a **stale RCN** (an out-of-date cost schedule or cost factor inflates replacement cost) and **under-counted depreciation** (mass appraisal applies normal age depreciation but may miss functional obsolescence like a dated floor plan or economic obsolescence from an external nuisance). The State's own evidence checklist invites "a photograph of elements detracting from the value... and an estimate, in terms of dollars, of their negative effect" — an explicit invitation to document the depreciation the schedules missed.
Q: What are the valid grounds for a formal assessment complaint?
Per IDOR, a formal complaint may be based on any of these claims: the assessor's market value is higher than actual market value (supportable by a recent open-market purchase or a professional appraisal); the assessed value is at a higher percentage of market value than the prevailing township or county median level, as shown in a sales-ratio study; the assessment is based on inaccurate information, such as an incorrect lot or building measurement; or the assessment is higher than those of similar neighboring properties.
Q: What level of assessment applies in Cook County, and what is equalization?
Statewide the statutory level is 33 1/3% of market value unless set otherwise by law, which the IDOR manuals teach. Cook County sets it otherwise through its own classification ordinance — for example, Class 2 residential near 10% and Class 5 commercial/industrial near 25% of market value (county ordinance figures, not IDOR training-manual figures; verify the current ordinance). Equalization then applies a uniform factor to bring levels, on average, to the mandated level — Equalization Factor = 33.33% ÷ Prior 3-Year Average Median Level. Assessed value times the equalization factor yields Equalized Assessed Value (EAV), from which the tax rate is computed. The multiplier is certified per county, per year by IDOR (the 2024 final Cook figure of record was 3.0355); confirm the current certified figure before relying on it.
Q: Does a business entity need an attorney to appeal at the Board of Review?
Often, yes — but confirm the specific board's rules. Board of Review rules in many jurisdictions, including Cook County, require that corporations, LLCs, and similarly organized entities be represented by a licensed attorney rather than a non-attorney officer; the requirement is not uniform across every entity form or every Illinois county, so check the rules of the board where the property sits (this is a board practice rule, not an IDOR training-manual rule). Income-producing property is overwhelmingly entity-held, so the income-approach challenges discussed here are frequently attorney work from the start. Even individual owners benefit from counsel who can build the sales-ratio and COD arguments the State's methodology rewards. Censum provides intelligence and filing rails; it is not a law firm and does not provide legal advice.