By James P. Regan

As published by, July 2003

Affordable assisted-living facilities promise to fill a critical housing gap for a significant portion of seniors. Over-valuation of these properties for real estate tax purposes may stymie their development.

Assisted Living properties allow Seniors to maintain their own apartments while providing them with meals, supplemental cleaning services, physical therapy, psychological counseling, and medication management. Those additional services result in additional payments, and that is where the problem begins.

Every jurisdiction recognizes that real estate taxes can only be levied on the value of the real estate itself, not on the services provided. The tendency of assessing authorities has been to include the funds received for services in their determination of the value of the real estate. There have been cases where the real estate taxes will exceed the gross rents paid for the apartments in those facilities. If that practice continues, the development of affordable assisted living facilities could be frustrated.

James P. Regan is the managing partner of the Chicago law firm of Fisk Kart Katz and Regan, Ltd., the Illinois member of American Property Tax Counsel (APTC), the national affiliation of property tax attorneys.