Splits or Consolidation of Property
Should I consolidate my two or more parcels of property into one? If you are a property owner with separate adjacent lots I hope this article gives you some insights regarding the pros and cons of consolidation.
There may be some tax advantages to consider when a property owner has no intentions of selling a separate vacant lot that is adjacent to their principle residence. It is possible for two smaller lots to have a higher combined assessed value than one single lot of the same size. Some exceptions may exist if one lot has some particular problem that affects Market Value. Since land is unique, each situation must be looked at on a case by case basis.
In general, a larger piece of land will usually be assessed less than two equally split lots that total in size equal to the single parcel. The reason is land, like other marketable commodities, exhibits economy of scale in the market place. This just means as lot size increases, the selling price per square foot decreases or quantity discount.
Another tax advantage of consolidation is all exemptions an owner is entitled to only apply to their principle residence. By consolidating your adjacent parcel into one parcel any exemptions’ such as General Homestead, Home Improvement, Regular Senior, and Senior Freeze will apply to the total now. None of these exemptions apply to a separate lot. As an example, suppose your house is in on a fifty-foot wide lot, and you own the adjacent same size lot. You want to construct a detached garage, but there is no room on lot that your house is located. You decide to construct the garage on this separate lot. A home improvement exemption would not apply in this instance. Regarding the senior freeze exemption, the best scenario is to consolidate the lots prior to getting the exemption, so if the combined assessed value is lower, the base assessment with the senior freeze will be lower.
Often the only advantage to keeping lots separate is holding them for resale like an investment, perhaps a home site for a relative, or to avoid a re-zoning process if the new proposed parcel's size would not be compatible with it's present zoning. Zoning laws may prevent having a smaller lot split out from a larger lot once they are consolidated together. Also check with the zoning official that the consolidation or split you are planning can be placed into a zoning category such as R1, E1, A1 etc. Due to a consolidation or split, the original parcels present or grandfather zoning may no longer apply. This may require a zoning hearing to get the parcel re-zoned to comply with the current zoning ordinance.
Anyone can fill out a property consolidation form at the Will County Mapping Dept. It takes a year for mapping to complete the consolidation process and assign a new Property Identification Number. Please call the assessor’s office regarding any assessment change inquiries due to consolidation of lots. Each must be looked at on a case by case basis. A single tax bill and the exemptions mentioned above apply in all consolidation cases.