What can Homeowners do When Property Taxes are too High?

Part 2 of a 2-Part Property Tax Series

Residential property owners across Michigan are once again bracing for the next round of assessments from their local property tax assessors.

In 2023, the inflation adjustment applied to the taxable value of property used by the state to determine property taxes reached the 5% cap allowable under Michigan law.

Various economic factors, including persistent inflation and soaring real estate prices were the primary drivers leading to the 5% cap for the second straight year. While inflation in 2023 was down relative to the prior year, and real estate prices have cooled a bit, the state announced that the inflation adjustment for 2024 will once again reach the 5% cap.

Property owners who did not buy their property or finish a major renovation in 2023 can expect that the taxable value of their home will increase by 5.1% for the 2024 tax year.

If you bought a home last year or completed a major home renovation, the taxable value of your property will likely be going up more than 5.0%. This is because Michigan law allows for the taxable values for homes to be uncapped during the year of conveyance or when major renovations are completed.

The state will apply the 5.0% inflation adjustment to the taxable value of a property to increase its value. Once the new taxable value is calculated, the local municipality will multiply the value by the local millage rates to determine summer and winter taxes for the year. The assessed value, taxable value and applicable millage rate for a property can be found by selecting the municipality where the property is located from the state directory and searching by the property’s address.

When a property owner disagrees with a property’s assessed value, the resulting taxes must still be timely paid even if the property owner intends to file a property tax appeal.

The following describes the appeal process beginning with a claim to the local municipality and possibly ending with the Michigan Court of Appeals.

Annual Assessment Notice

Beginning every February, local tax assessors mail out to property owners a “Notice of Assessment, Taxable Valuation and Property Classification” letter. Many property owners will file or throw out this notice without a second look because of the presence of the words “THIS IS NOT A TAX BILL” written at the top of the notice. Some owners may simply not grasp the importance of the notice.  Receipt of this notice should be treated as more than a mere formality.

When the notice of assessment is received, it should be carefully reviewed to determine not just the amount of the property tax, but also how the taxes changed compared with the prior year. This process starts by reviewing the property’s assessed value and its taxable value.

A property’s assessed value, also called the State Equalized Value (SEV), is calculated yearly. It is 50% of the true cash value of the property determined by reviewing current market sales in the area. The assessed value is often less than the property’s true market value because it is based on a one to two-year study of prior market sales. Accordingly, the assessed value will not necessarily be half of what the property would sell for when assessed.

By uncapping the adjustment to the taxable value to exceed the 5% cap, tax assessors can raise the taxable value be more in line with the current assessed value.

Once the assessed and taxable values are determined for the year, the assessor will multiply the taxable value by the local millage rate to determine the tax due for the property.

If, after reviewing the changes to the assessed and taxable values and the related property tax you believe that there was an error, a property tax appeal may be filed with your local municipality. The appeal is essentially a request  to correct any assessment errors for the current tax year. Any assessment errors discovered in prior tax years cannot be appealed. As noted, all property taxes due must be paid while the appeal is pending.

March Board of Review – Local Appeal

The first step before filing a formal appeal to the board of review is to contact the local tax assessor. In many circumstances, an informal call to the assessor to discuss identifiable errors in the assessment will be enough to fix the problem without the need for an actual appeal.

When the dispute cannot be informally resolved, the second step is to file a petition to appeal the property tax with the board of review for the township or city where the property is located. The deadline to file an appeal petition will be included in the Notice of Assessment. The appeal petition will include documentation describing the assessment error. This documentation should support the correct values to be used to compute the appropriate property tax.

After receiving an assessment appeal, the board of review will hold a hearing to consider the information provided. If the board of review agrees that a mistake was made, it will be corrected at the hearing. However, if the board denies the appeal, in whole or in part, and the owner remains dissatisfied with the assessment and resulting property tax, the board of review is not the last stop.

Michigan Tax Tribunal

The Michigan Tax Tribunal is a state agency with the authority to interpret laws and make decisions similar to those made by judges in the courts. The tribunal has the authority to overrule a local board of review. 

An appeal petition to the tax tribunal will include the petitioner’s name and contact information, the classification of the property, the location of the property and the reasons for the appeal.

The hearing for the appeal is typically scheduled for early the following It may be heard sooner depending on the schedule of the tax tribunal. After hearing and considering the appeal, the tribunal will render a final determination. This will effectively end the property tax appeal for that tax year. However, the tribunal’s decision is not necessarily the end of the appeal process.

A dissatisfied property owner can also appeal to the Michigan Court of Appeals, albeit on a limited basis. Michigan law states that the tax tribunal “…is the final agency for the administration of property tax laws.” Thus, an appeal to the court of appeals is rare because the court will only consider legal errors in applying the law or in the exercise of the tribunal’s legal procedures.

Conclusion

The property tax appeals process allows property owners to challenge their property assessment and resulting taxes. While the process itself is not quick, and it can be difficult to understand, an attorney can help you position yourself for the best chance of success.

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