Rob Hartley
Founder, AppealDesk · February 16, 2026
Property Tax Appeals for Investment Properties
Updated February 2026 · 9 min read
Investment properties are more likely to be overassessed than owner-occupied homes — and the financial impact is larger because they don’t qualify for homestead exemptions and often face higher assessment ratios. The appeal process is the same, but you have an additional tool: the income approach, which values the property based on what it actually earns. A successful appeal directly increases cash flow and ROI.
Why Investment Properties Pay More and Get Overassessed More Often
Investment properties face a tax disadvantage from the start. No homestead exemptions ($25,000-$100,000+ off assessed value) and often higher assessment ratios:
- South Carolina: 4% owner-occupied vs. 6% investment (50% higher)
- Cook County, IL: 10% residential vs. 25% commercial
- Indiana: $45,000 homestead deduction for owners; $0 for investors
According to U.S. Census Bureau data, property taxes represent one of the largest operating expenses for rental properties. Counties also apply mass-appraisal models designed for owner-occupied homes without adjusting for rental conditions, vacancy, or deferred maintenance. A rental in average condition gets assessed like a fully renovated owner-occupied home next door.
Three Valuation Approaches for Investment Property Appeals
1. Comparable Sales Approach
Same as residential appeals: compare assessed value to recent sales of similar properties. Works well for single-family rentals and small multifamily (2-4 units). See our guide on finding comparable sales.
2. Income Approach (Most Powerful for Rentals)
Values a property based on income it generates. This is the strongest tool for investment appeals because it reflects what the property is actually worth to an investor.
Net Operating Income (NOI) ÷ Capitalization Rate = Property Value
Example: Duplex: $36,000/yr gross rent − $12,000 expenses = $24,000 NOI. At 6% cap rate: $24,000 ÷ 0.06 = $400,000. If county assessed at $500,000, you have a $100,000 overassessment with clear income data.
You’ll need: rent rolls (or market rent comps), expense documentation, and local cap rate data. The IAAO recognizes the income approach as preferred for income-producing properties.
3. Cost Approach
Values at replacement cost minus depreciation. Less common but useful for unique properties (converted warehouses, self-storage, specialty commercial) where sales and income comps are limited.
Check Your Investment Property's Assessment — Free
Enter any property address to see estimated overassessment based on comparable sales.
The Cash Flow Impact
Tax savings go directly to NOI, which affects property value and ROI:
| Assessment Reduction | Annual Savings (2%) | Value Increase (6% cap) | 5-Year Savings |
|---|---|---|---|
| $50,000 | $1,000 | +$16,667 | $5,000 |
| $100,000 | $2,000 | +$33,333 | $10,000 |
| $200,000 | $4,000 | +$66,667 | $20,000 |
A $2,000/year tax savings doesn’t just save $2,000 — it adds $33,333 to the property’s income-based value when capitalized at 6%.
Portfolio Strategy: Appealing Multiple Properties
Each property requires a separate filing, but evidence research overlaps for properties in the same area. At $49 per property with AppealDesk, a 5-property portfolio costs $245 total. If each saves $500/year, that’s $2,500/year for a $245 investment — 10:1 return in year one.
Tax deduction bonus: Appeal costs for investment properties are deductible business expenses on Schedule E. Property taxes are also fully deductible — no SALT cap for investment properties.
Strategies by Property Type
- Single-family rentals: Use comparable sales. Argue for 5-10% condition adjustment vs. owner-occupied comps.
- Small multifamily (2-4 units): Use both comparable sales and income approach. Income often produces a lower, more accurate value.
- Large multifamily (5+ units): Income approach is almost always best. Bring rent rolls, expenses, and local cap rates.
- Commercial: Income approach with professional representation recommended. Stakes are higher — overassessment commonly runs $10,000-50,000+/year.
Check Any Property's Assessment — Free
Enter an address to see estimated overassessment and potential annual savings.
Common Mistakes in Investment Property Appeals
- Using owner-occupied comps without adjustments: Owner-occupied homes sell 5-15% higher than equivalent investor purchases.
- Ignoring the income approach: Often produces a lower, more defensible value for income properties.
- Not documenting vacancy and expenses: Counties assume 0% vacancy and minimal expenses. Your actual numbers reduce NOI and value.
- Appealing only one property: Same market conditions affect all properties in an area. Appeal all overassessed ones.