2026 Property Tax Increases: Preparing Your CAM Reconciliation
The Assessment Cycle Catches Up
County assessors across the country are applying updated values for the 2026 tax year. Many jurisdictions that paused or reduced assessments during 2020-2022 are now correcting to current market values. The result: commercial property tax bills are rising faster than general inflation in most metros.
| Metro | Estimated 2026 Assessment Increase | Context |
|---|---|---|
| Houston (Harris County) | 10-14% | HCAD reappraisal, strong industrial/multifamily comps |
| Dallas-Fort Worth | 8-12% | Tarrant/Dallas County reappraisal cycle |
| New York City | 5-8% | Class 4 commercial, tentative roll adjustments |
| Chicago (Cook County) | 12-18% | Triennial reassessment in some townships |
| Los Angeles | 2-4% | Prop 13 limits (2% max on existing ownership) |
| Phoenix (Maricopa) | 9-13% | Full cash value reappraisal |
| Atlanta (Fulton County) | 10-15% | Board of Assessors updated comparable sales |
Property taxes typically represent 25-40% of total recoverable operating expenses in a CAM reconciliation. A 12% increase in the tax component can move total CAM charges by 3-5% even if every other category is flat.
Impact on Tenant Statements
For a tenant paying $6.50/SF in CAM estimates based on last year's actuals, a 12% property tax increase (assuming taxes are 35% of the pool) produces:
- Tax component increase: $6.50 x 0.35 x 0.12 = $0.27/SF
- Total CAM increase: $6.50 + $0.27 = $6.77/SF (4.2% increase)
- On a 10,000 SF suite: $2,730 additional annual charge
For a 50,000 SF tenant: $13,650 additional annual charge.
These aren't small numbers. Tenants will ask questions. The quality of your answer determines whether they accept the statement or call an auditor.
Proactive Communication Matters
The worst approach: send a reconciliation statement showing a 4-5% CAM increase with no explanation. The tenant sees a larger number, doesn't understand why, and suspects billing errors.
The better approach: communicate the tax increase before the reconciliation statement arrives.
Mid-year estimate adjustment. If you receive a 2026 tax bill showing a 12% increase, adjust CAM estimates for Q3 and Q4 to reduce the year-end true-up. A $2,730 increase spread across 12 monthly estimates is $227/month. Hitting the tenant with the full amount in a single true-up billing feels larger and generates more pushback.
Cover letter with the statement. Include a brief explanation of the tax increase: the assessment authority, the percentage increase, and the fact that this is a direct pass-through of the actual tax bill. Attach a copy of the tax bill if practical.
Year-over-year comparison. Show last year's tax amount next to this year's. Show the percentage change. Show the assessment authority's reference number. Make it traceable.
The Property Tax Protest Question
Rising assessments create a duty — in some leases an explicit one — to consider protesting.
A 12% increase on a $500,000 tax bill adds $60,000 in annual CAM pass-throughs. If a protest could reduce the assessment by even 5-8%, that's $25,000-$40,000 in savings distributed across all tenants.
Check your leases. Some leases require the landlord to protest assessments that exceed a threshold. Others give the tenant the right to request a protest. A few explicitly authorize the landlord to pass through protest costs (attorney fees, appraisal costs) as a CAM item.
File proactively. In most jurisdictions, the cost of filing a protest is low ($0-$500) and there's no downside risk — the assessment can only stay the same or go down. The ROI of a successful protest is substantial and recurring.
Distribute refunds correctly. If you win a protest and receive a tax refund or reduction, that benefit must flow through to tenants in the next reconciliation. A refund received in 2027 for the 2026 tax year should be credited to the 2026 reconciliation (if not yet sent) or adjusted in the 2027 reconciliation.
Special Situations
Michigan and other uncapping states. Properties acquired in 2025-2026 may face assessment "uncapping" where the taxable value resets to current market value. This can produce 20-50% tax increases in the acquisition year. The cover letter needs to explain the uncapping mechanism.
California Prop 13 properties. Assessment increases are capped at 2% annually (absent a change of ownership), so the tax impact is muted. But supplemental tax bills from recent acquisitions or new construction can still create significant CAM adjustments.
PILOT/tax abatement properties. If your property has a Payment In Lieu of Taxes agreement or tax abatement, verify how the abatement interacts with CAM. Some leases pass through the PILOT payment. Others pass through what the taxes would have been without the abatement. The distinction matters.
Controller Action Items
- Review 2026 tax bills as they arrive. Compare to prior year. Flag any increase above 8%.
- Adjust CAM estimates for affected properties before Q3.
- Draft a tenant communication explaining the tax increase for affected properties.
- Review protest deadlines for your jurisdiction. File if the increase appears excessive.
- Update your reconciliation workbook with the new tax amounts and verify they're coded to the correct GL account and recovery pool.
Related Resources
- Real Estate Tax Reconciliation — Tax pass-through methodology
- Property Tax Protest & CAM Interaction — Protest timing and refund distribution
- Harris County Gross-Up — Texas-specific HCAD considerations
- CAM Estimate Forecasting — Adjusting estimates for tax increases