An attorney called me with a question:  her client had been approached by a company that builds towers for mobile communications; they want to lease a 20’ x 20’ area of her client’s property for a communications tower.  The company has built them in other locations in Illinois, and have assured the taxpayer that the tower will be considered personal property and will not be assessed.  Was that true?  The answer depends on where the property was located, and how similar towers were assessed prior to 1979.

In Kane County, communications towers are indeed assessed and taxed as real property; but this is not the case everywhere in Illinois.  Some counties, such as neighboring Cook County, classify communications towers as personal property; thus, they do not assess and tax communications towers.  Now these differences are not arbitrary; they are the result of the Freeze Act, a law enacted almost a half-century ago after Illinois phased out the taxation of personal property.[1] 

Real Property and Personal Property in General

For the uninitiated, property generally falls into two broad categories:  real property and personal property.  In Illinois, real property is defined as “[t]he land itself, with all things contained therein, and also all buildings, structures and improvements, and other permanent fixtures thereon, including all oil, gas, coal, and other minerals in the land and the right to remove oil, gas and other minerals, excluding coal, from the land, and all rights and privileges belonging or pertaining thereto.”[2]  From this definition, it is clear that the definition of real property has four components: 

1. The land, including its natural environment (e.g., vegetation, timber, and landscaping);
2. All buildings, structures and improvements, and other permanent fixtures on the land;
3. All oil, gas, coal, and other minerals in the land, including the right of remove these minerals; and
4. All rights and privileges associated with owning the land.

Conversely, personal property is defined by exception: property that is not real is personal.[3]

160 Years of Personal Property Taxation in Illinois

The first Illinois constitution authorized a general ad valorem tax (i.e., a tax levy apportioned among taxpayers according to the value of each taxpayer’s property[4]) on both real and personal property.[5]    The first general assembly applied this only to land and certain types of personal property.[6]  But in 1839, the General Assembly specifically provided that all property, both real and personal, was subject to taxation.[7]  Personal property taxation continued for more than a century, but was becoming increasingly unpopular due to real or perceived inequities in valuation.  In part, these inequities led to the creation of the annual instructional assembly for township assessors, where the supervisor of assessments “shall give instructions to them as shall tend to a uniformity in the actions of the assessors and deputy assessors” in the county.[8]

Because of this unpopularity, ad valorem taxation of the personal property of individuals was largely repealed by the General Assembly in 1969;[9] only the ad valorem taxation of personal property of corporations remained. When the 1970 Illinois constitutional convention convened, there was a strong statewide sentiment to permanently abolish all ad valorem personal property taxation.[10]  The convention proposed two provisions that were included in the new constitution:

• The 1969 repeal on personal property taxation for individuals was made permanent: “Any ad valorem personal property tax abolished on or before the effective date of this Constitution shall not be reinstated.”[11] 
• All remaining personal property taxation would be eliminated within eight years: “On or before January 1, 1979, the General Assembly by law shall abolish all ad valorem personal property taxes.”[12]

The 1970 Constitution was approved by the electorate in December 1970 and became effective July 1, 1971.[13]  But the General Assembly was having difficulty determining a replacement for the personal property tax and had still not acted when the 1979 deadline arrived.  In April of that year, the Illinois Supreme Court declared the collection of the personal property tax to be unconstitutional, noting that “limitations written into the Constitution are restrictions on legislative power and are enforceable by the courts.”[14]  After that ruling, the General Assembly repealed all remaining ad valorem personal property tax laws and implemented the personal property replacement tax,[15] which is a tax on corporate income.[16] 

Distinguishing Real Property and Personal Property

Another difficulty in transitioning away from the personal property tax was a diversity of opinion on how to distinguish real property and personal property.  Since the determination was made at the county level, this meant that there were 102 different standards for determining whether a specific structure was classified as real or personal. 

On the surface, this seems like a simple distinction:  if a structure cannot be moved (such as a home), most agree it would be real property; whereas if something can be easily moved (such as an automobile), it is personal property.  But such a simple definition can still leave a lot of grey area in wide variety of structures, ranging from billboards[17] to bowling alleys[18] to nuclear power plants.[19]  And as previously noted, prior to 1979 communication towers in Kane County had been assessed and taxed as real property, whereas communication towers in neighboring Cook County were assessed and taxed as personal property. 

Before to the adoption of the 1970 constitution, this distinction was merely academic, as there was no difference in the rate of taxation between these classifications.  But simply phasing out the taxation of personal property without addressing this issue would cause chaos around the state, as property previously taxed as personal property could then be reclassified and taxed as real property.  The General Assembly decided that permitting such reclassification would defeat the purpose of repealing personal property taxation and enacted the following provision: 

Notwithstanding the provisions of this or any other Act, an ad valorem personal property tax shall not be levied after January 1, 1979, on any personal property having tax situs in this State ****. No property lawfully assessed and taxed as personal property under this Act prior to January 1, 1979 shall be classified as real property subject to assessment and taxation under this Act after January 1, 1979. No property lawfully assessed and taxed as real property under this Act prior to January 1, 1979 shall be classified as personal property subject to assessment and taxation under this Act after January 1, 1979.[20]

And in 1983, the General Assembly expanded this to include “property of a like kind acquired or placed in use after January 1, 1979” in both definitions.[21] This meant that if a property type that was valued as real property prior to 1979 was replaced with another component, the new component would continue to be valued as real property.  This act is commonly called the Freeze Act,[22] as it “froze” the determination of what was real property and what was personal property as of December 31, 1978.[23] 

Again, I stress that the application of the Freeze Act can vary widely by county:  Just because something was real property or personal property in one county has no bearing whatsoever on another county.  From a legal standpoint, the practices of assessors in one county are not relevant to whether a property is real or personal property in a different county.[24]  Thus, how another county treats communication towers is, from a legal standpoint, not relevant to how Kane County treats them.  Ultimately, if it is known how a county treated an improvement type prior to 1979, that will be dispositive.

When it has not been established how an improvement or improvement type was treated prior to 1979, or if the improvement is of a type that did not exist prior to 1979, then the courts have distinguished between taxable improvements and non-taxable personal property through the intention test. In Cherry Bowl, the court held that, “it is the intent to permanently improve the real estate, not simply the intent to use the equipment in the business carried on in it . . . which is relevant in determining whether an item of personal property has become a fixture.”[25] 

The Intention Test was further refined in Beeler v. Boylan.[26]  The Beeler court provided three criteria that should be considered when determining whether a fixture or annexation is real property: 

• The property must be annexed to the realty or to something appurtenant;
• The property must be used for the same purpose as the property it is annexed to; and
• The party making the annexation must intend to make a permanent accession to the property.

The improvement in Beeler was a grain dryer that was designed to be moved; it was shared by several farms, and moved to a new location each year.  Thus, the structure in question was not “designed as a permanent and valuable improvement to the realty.”[27]  Any structure that is designed to be moved would fail the Beeler test.

The General Assembly still wrestles with this topic:  in the most recent session of the General Assembly, legislation was introduced that if adopted would have required a structure to have a permanent foundation or a connection to utilities to be considered real property.  But given the potential for wide-ranging unintended consequences, the bill was not called and was returned to the Assignments Committee by the end of the session.[28] 

Separate Permanent Index Numbers for Communication Towers

While a communication tower structure is in real property that creates a tax liability in Kane County, it is possible to develop a separate parcel identification number so the tract that contains the tower can be billed separately, if that would be helpful.  This can be done by establishing a separate permanent index number for the tract containing the tower. 

The Property Tax Code specifically defines a permanent index number (or “PIN”) as “[a] number used to identify a parcel of property for assessment and taxation purposes.”[29]  I establish PINs using three bases:

1. Unity of ownership;[30]
2. Unity of taxing districts;[31] and
3. Unity of highest and best use, which is “[t]the reasonably probable use of the property that results in the highest value.  The four criteria that highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.”[32]

Because of communications tower will typically have a different highest and best use that the remainder of the property, I can establish a separate PIN for tax purposes upon application of the owner (i.e., the owner of the underlying land, not the lessee of the area).  A legal description of the land subject to the lease will be needed to establish the separate PIN.  For more information on this process, please call my office or download the Request for Tax Parcel Division form from Assessments.KaneCountyIL.gov.

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© 2025 by Kane County Bar Association.  Originally written for the “As the Assessor column in Bar Briefs magazine, a publication of the Kane County Bar Association.  Reprinted by permission of Kane County Bar Association.  All rights reserved.