Property Tax Web Series

Abstract

This paper studies the inequality in property taxation in the U.S. single-family home market based on a property’s assessed value. Comparing the assessment ratio of properties owned by investors with those of owner-occupiers, we find a 3.0%–4.7% assessment discount nationwide for properties owned by large investors (i.e., those owning more than 100 properties) relative to owner-occupied homes in the same areas. This difference translates into an estimated total annual property tax savings of $66–$104 million for large investors across the country. Further evidence based on micro-level appeals data in Cook County, Illinois, and Florida suggests that the institutional assessment discount results from a higher likelihood of appeal and more favorable outcomes upon a successful appeal for large investors. States with a fairer property taxation administration, a higher market share by large investors, and a higher property tax burden show a greater assessment discount for large investors.

This paper was presented by Serena Xiao (Texas Tech University) on March 29, 2024 as part of the 2023-2024 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. Daniel McMillen (University of Illinois Chicago) was the discussant for this presentation.

McMillen comments on Xiao's "Real Estate Investors and Property Taxation."