Inherited a commercial building in Illinois? What to do first
An inherited building comes with tenants, bills and decisions before anyone has decided whether to keep it. In the first weeks, protect the building and find out what it was worth as of the date of death.
First, secure the building: keep the insurance, utilities and rent collection running, and tell the tenants where to pay. Second, find out who has the authority to act; usually that is the executor or administrator named by the probate court, or the trustee if the building was in a trust. Third, get the building’s value as of the date of death, because under federal law that value generally becomes the heirs’ tax basis, which can wipe out the gain that built up during the owner’s lifetime. Then decide together whether to keep, lease or sell.
Protect the building while the estate is settled
A building doesn’t pause for probate.
Insurance
Call the insurer to confirm that the policy stays in force after the owner’s death, and ask what the policy requires if the building is or becomes vacant.
Rent and tenants
Find the leases and the rent roll. Write to the tenants once the person with authority is in place, telling them who to pay and who to call. Deposit rent into an estate or trust account, not a personal one.
Bills and taxes
Keep paying the property taxes, utilities, mortgage and service contracts. Lake County bills commercial property taxes in two installments a year. See the property tax index for typical taxes by town.
Keys, codes and records
Collect keys, alarm codes, service contacts, surveys, permits and the last few years of income and expenses. Buyers, appraisers and the tax preparer will ask for them.
How title passes, and who can sign
How the owner held title to the building determines who can act and how quickly.
| How it was held | Who can act | What to know |
|---|---|---|
| In the owner’s name, with a will or without one | The executor or administrator, once the court issues letters of office | An independent representative can usually sell real estate without a separate court order; supervised administration generally needs the court’s approval unless the will grants a power of sale. |
| In a living trust | The successor trustee | Often no probate for the building; the trust document sets the trustee’s powers. |
| In an Illinois land trust | The bank trustee, on the beneficiary’s direction | The beneficial interest passes as the trust agreement provides; confirm who now holds it. |
| With a transfer on death instrument | The named beneficiary | Illinois allows these for real estate held in a person’s own name; the beneficiary takes the building subject to its mortgage and liens. |
| In joint tenancy | The surviving joint owner | Title passes to the survivor outside probate. |
Why the date-of-death value matters
It generally sets the heirs’ tax basis, and it tells the family what they are deciding about.
The stepped-up basis
Under federal law, heirs generally take inherited property at its fair market value on the date of death. Sell near that value and there may be little or no gain to tax, even on a building bought decades ago.
Appraisal or broker opinion
If the estate must file an estate tax return, the value is usually supported by a written appraisal attached to the return. A broker’s written opinion of value, based on recorded sales and the leases, is a common starting point for deciding what to do. See what commercial property is worth in Lake County.
Estate tax
Most estates owe no estate tax. Illinois taxes estates above $4 million, while the federal exemption for 2026 deaths is $15 million, so an estate with a building and other assets can owe Illinois tax but no federal tax. Ask the estate’s attorney or CPA.
Deciding what to do with it
Co-heirs often want different things. The numbers help.
Keep it
Works when the heirs agree on management, repairs and how to split the income. A manager can take on the day-to-day work.
Lease it
If the building is empty or a tenant is leaving, compare leasing it with selling it vacant. See your tenant is leaving.
Sell it
Selling near the stepped-up value can mean little tax, which also makes a 1031 exchange less important than it would be for the original owner. Plan the sale with the CPA. See selling a commercial building.
An example
A family inherited a 38,534 SF flex campus in Northbrook with more than two dozen tenants, a half-time caretaker and a rent roll nobody fully understood. I got the tenants current, leased the vacancies and sold it for $2,250,000. Read the Sky Harbor case study.
When heirs disagree
Illinois law lets a co-owner ask a court to divide or sell jointly owned property. When a partition case falls under the Illinois heirs property law, the other heirs get a chance to buy out a share first, and a court-ordered sale generally goes to the open market through a licensed broker. A buyout at an agreed value is usually faster and cheaper.
Common questions
Do I have to go through probate to sell an inherited building?
It depends on how the owner held it. A building in the owner’s name alone usually goes through probate, and the executor or administrator sells it. A building held in a living trust, a land trust or joint tenancy can pass outside probate, as can one covered by a transfer on death instrument.
Will I owe capital gains tax if I sell?
Usually only on any increase in value after the date of death, because heirs generally take the building at its date-of-death value, and an heir’s sale counts as long-term. Depreciation the owner took isn’t recaptured, but depreciation you take after inheriting lowers your basis. Confirm with a CPA.
Will the property taxes go up because the owner died?
Not automatically. Illinois has no rule that reassesses a property because of a death or a sale. Lake County reassesses on a four-year cycle, next in 2027; assessors use market sales to set values, and the yearly equalization factor can still change assessed values in between.
Can we sell while the estate is still open?
Often, yes. An independent administrator in Illinois can usually sell real estate without a separate court order. In a supervised estate the court usually approves the sale.
What if the building has tenants?
The leases stay in force after the owner’s death. The estate or the heirs step into the landlord’s role and collect the rent.
Inherited a building in Lake County or the north suburbs?
Tell me the address and the date of death. I’ll give you a written opinion of what it was worth then and what it would sell for now. The estate’s attorney and CPA can take it from there.
Jason Bitton is a commercial real estate broker with RE/MAX Commercial in Libertyville, IL — #1 RE/MAX Commercial Broker in Illinois (2022, 2024, 2025) — serving Lake County, the North Shore, the O’Hare corridor, and the Chicago suburbs.