How Commercial Properties Are Assessed

Market value is what your property would sell for in an open transaction between a willing buyer and a willing seller under normal conditions, while assessed value is the number the local assessor assigns for tax purposes. In Michigan, state equalized value (SEV) is supposed to be 50% of true cash value, and the taxable value tracks even lower for long-held properties under the Proposal A cap. In Ohio and Indiana, assessed value is generally meant to approximate market value directly. When the assessed value exceeds what the market would actually support, you are over-assessed and likely overpaying — and the gap often widens quietly because assessors don't revisit property-specific conditions every year. Our deep dive on assessed value vs. market value walks through exactly how the two numbers diverge, and our appeal process guide explains how to close that gap.

Assessors may use any of the three approaches, but the income approach is most common for income-producing commercial properties like office buildings, retail centers, and apartments. When the income approach is used, the result hinges on the capitalization rate the assessor selects — see our guide on cap rates and property taxes for how that one number can swing your value by millions. The cost approach is more common for special-purpose properties. Sales comparison is often used alongside the other methods as a cross-check.

Yes. Assessors often rely on broad market trends rather than property-specific data. They may also use outdated income assumptions, incorrect square footage, or miss factors like deferred maintenance and vacancy. This is why over-assessments are common — and why appeals exist. Learn about the property tax appeal process and what evidence you need to challenge an over-assessment.

Start by comparing your assessed value to three independent benchmarks: recent comparable sales in your submarket, your property's actual trailing income and expenses, and the cost to replace the building today less realistic depreciation. If any of those produces a number meaningfully lower than the assessor's, you likely have grounds for an appeal. The next step is documenting the differences carefully — rent rolls, operating statements, photos of deferred maintenance, and a list of comparable sales — before the filing window closes. A free assessment review from EPTA gives you a professional second opinion at no cost, and we will tell you exactly whether an appeal makes sense before you spend time on it.

Both can significantly reduce the true market value of your property — but only if you document them. Mass appraisal models assume properties are in average condition and stabilized occupancy, so any deferred maintenance, functional obsolescence, or above-market vacancy that you can prove becomes a direct adjustment against the assessor's number. Photos, contractor bids, and rent rolls showing sustained vacancy all carry real weight in negotiation and at hearing. This kind of property-specific evidence is often the difference-maker for industrial and older retail buildings, and our evidence guide explains how to organize it for submission.