Residential property owners across Michigan are preparing for the latest round of local property tax assessments. With inflation and rising real estate prices driving significant increases in taxable values, many homeowners are bracing for higher property tax bills.
For those who believe their property has been overvalued, Michigan offers a structured appeals process to challenge assessments and seek relief.
Understanding the 2024 Taxable Value Increase
In 2024, Michigan’s inflation rate multiplier reached the maximum allowable taxable value increase of 5%, driven by high inflation in 2022 and 2023. Inflation returned to pre-pandemic levels in 2024. In response, the state announced an inflation rate multiplier value of 3.1% for 2025. Here's what homeowners can expect:
- For most homeowners: Taxable values will rise by 3.1% unless they purchased or completed major renovations on their property in 2024.
- For new purchases or renovations: The taxable value is “uncapped,” allowing it to increase beyond the 3.1% limit to align with the property’s market value.
If you are a property owner who did not purchase a home or complete any major renovations in 2024, you can expect that your property taxes will increase by 3.1%. This is a mandatory increase required by law and as such, is not subject to appeal.
Taxable value increases are calculated by applying the inflation rate multiplier to the taxable value for the prior year. The local assessor then multiplies the new taxable value by the local millage rates to determine property taxes for the year.
Once property taxes have been assessed, a property owner can begin the process of filing an appeal. Even if a homeowner disputes their assessment, taxes must be paid on time before filing an appeal.
Steps for Appealing High Property Taxes
The process begins when the local assessor determines a property’s assessed value for the year, which is approximately 50% of its estimated market value. The assessed value is not capped and can increase or decrease as much as necessary to reflect the current market value of a property.
The assessed value is different from the property’s taxable value. When a property is sold, the assessed and taxable values are increased to be equal in the next calendar year following the sale.
Over time, the assessed value and taxable value will begin to move apart because of how the taxable value is capped by state law. It is subject to an annual cap based on the lesser of the inflation rate multiplier or a maximum of 5%. The taxable value is used to calculate annual property taxes.
Below are steps residential property owners can take to prepare for a potential property tax appeal:
1. Review Your Annual Assessment Notice
Each February, local tax assessors send out a Notice of Assessment, Taxable Valuation, and Property Classification. Many homeowners overlook this document because it states, “THIS IS NOT A TAX BILL.” However, it contains vital information about your property’s assessed and taxable values.
- Assessed Value (SEV): This represents 50% of the property’s estimated market value based on recent sales in your area. It may lag behind current market trends due to reliance on sales data for the prior one to two years.
- Taxable Value: This is used to calculate your tax bill and is subject to annual caps (5% or the inflation rate, whichever is lower).
If you believe there’s an error—such as an overestimation of market value or incorrect property details—you can file an appeal.
2. Start with Your Local Assessor
Before filing a formal appeal, contact your local assessor to discuss any discrepancies in your assessment. Common errors include incorrect square footage, outdated property features or misclassification of property type or use. Many assessors are willing to correct factual mistakes without requiring further action.
3. File an Appeal with the March Board of Review
If issues remain unresolved after speaking with the assessor, you can file an appeal with your local board of review:
- Deadline: The deadline for submitting an appeal is included in your February assessment notice. The deadline is different for each municipality.
- Documentation: Prepare evidence to support your claim, such as:
- Comparable sales data from similar properties
- Professional appraisals
- Records showing inaccuracies in the assessor’s data (e.g., incorrect lot size)
During the hearing, the board will review your evidence and decide whether to adjust your assessed value. If successful, this adjustment will reduce the taxable value for the property and the resulting taxes.
4. Appeal to the Michigan Tax Tribunal
If you’re dissatisfied with the board of review’s decision, you can escalate your case to the Michigan Tax Tribunal:
- Filing requirementsinclude submission of :
- Your name and contact details
- Property classification (residential)
- Location and reasons for disputing the assessment
- Deadline: Petitions must be filed at the Tax Tribunal by July 31 of the tax year.
- Hearing Process: The tribunal schedules hearings early in the following year. After reviewing evidence from both parties, it will issue a final determination.
While tribunal decisions are binding, appeals can be made to the Michigan Court of Appeals on limited legal grounds (e.g., procedural errors).
Key Considerations for Homeowners
- Timely Payments: Property taxes must be paid even if you’re appealing the assessment.
- Professional Assistance: Complex cases may benefit from hiring a real estate appraiser or attorney.
- Evidence Preparation: Strong documentation is critical for successfully challenging an assessment.
Michigan homeowners have options when facing high property taxes due to inaccurate assessments. By carefully reviewing annual notices and following the appeals process—starting with local assessors and boards of review—homeowners can challenge these errors and potentially reduce their property taxes. For complex cases or significant disputes, consulting professionals can improve your chances of success.
- Senior Attorney
Joseph A. Peterson is a member of Plunkett Cooney's Business Transactions & Planning Practice Group and serves as leader of the firm's Tax Law Practice Group. He has extensive experience with tax law, risk management and litigation.
Add a comment
Subscribe
RSSTopics
Recent Updates
- Ripped from the Headlines: The (Estate Planning) Case of Virginia Halas McCaskey and the Chicago Bears
- Avoiding Probate Requires Knowledge About Which Assets the Process Includes
- Navigating the New Crypto Tax Reporting Requirements
- What Is a Succession Plan and Why Does Your Business Need One?
- Top 10 Tax Law Tips for 2025
- What Homeowners Can Do When Property Taxes Are Too High
- Taxpayers Have 3 Options for Resolving IRS Delinquency Notices
- Murdoch Case Illustrates Difficulty of Unwinding Irrevocable Trusts
- A Hidden Gem in Estate Planning – The Lady Bird Deed
- How to Qualify for an IRS Penalty Abatement