Property Tax Appeal Guide
A Guide to the Michigan Property Tax Appeal Process
The good news is you don't need to accept the value your local assessor places on your property.
This guide provides explanations, information to help you determine if you can reduce your Michigan property tax bill, answers questions you might have about your property tax, and also includes an example of an appeal letter outlining what you need to address when you begin the process of appealing your property taxes in Michigan.
Many wonder, "What makes up my Michigan Property Tax?"
As you know, Michigan property taxes can be significant. Public schools, local government, community colleges, public transportation, libraries plus much more are funded by property taxes.
How Michigan Property Taxes are Determined
What prompts a visit from local assessors?
There are three main triggers which result in a visit from your local assessor:
Being added to the tax rolls
When property goes through a significant change
During the assessor's visit a worksheet is completed and the necessary assessing information is recorded. The data from the worksheet is transferred to an Assessment Card in the assessor's office, and in most cases the Assessment Card is computerized. The software assists the assessor in determining your property's value.
The value used to determine your property tax bill
The Information Your Property Tax Assessment Notice Contains
The notice contains three values you should be familiar with:
Assessed Value (AV)
State Equalized Value (SEV)
Taxable Value (TV)
Upon sale of the property, the TV "uncaps"
When you purchased your home, the SEV and the TV were identical. Proposal A, approved by voters in 1994, prohibited the Taxable Value from increasing by more than inflation or 5% in any year. During the years you've owned your home, its value likely increased faster than inflation. Over those years, the gap between these two values continued to grow. Upon sale of the property, the Taxable Value "uncaps" and becomes the new amount of the SEV.
Taxable Value is the most important number to homeowners. The amount of property taxes for any parcel is the TV multiplied by the total millage rate in that jurisdiction. Only by reducing the TV can you reduce your property taxes.
Many property owners consider any increase in the SEV a bad thing, but you will not pay taxes on this amount. In fact, it can be beneficial for these values to increase. A larger AV can increase your home's sale price and makes refinancing or obtaining a second mortgage easier. However, when you try to sell your home, potential buyers know they will have a larger tax bill than you did because the TV "uncaps" after the purchase. This is sometimes referred to as the "pop-up tax."
The Assessed Value of your home is not based on the sale price. The law is clear that this value is determined by comparing your house to those that are comparable in the area.
Your Legal Right to Appeal Your Property Tax Assessment
What you can do if you believe the assessed values are too high.
Changing the Assessed Value does not reduce your taxes
Valid Reasons for Reducing Your Property Tax Assessment
Believing your taxes are too high is not a sufficient reason to appeal to the Board of Review. Additionally, you can't appeal the values because you are not able to pay your tax bill.
8 Different Reasons Used as the Basis for a Property Tax Appeal
1. The property has the wrong property classification.
2. The Principal Residence Exemption is missing.
3. There is a mistake on the Assessment Card.
4. The "Percent Good" is too high.
5. There are problems with the home not on the Assessment Card.
6. The house is in a poor location.
7. The value of the home is higher than the sale price.
8. The Assessed Value is more than comparable homes.
How to Appeal Your Property Taxes
You may be able to talk directly to the assessor about errors on your Assessment Card. If an error exists, the assessor will make the necessary changes. December 31 is tax day in Michigan. After December 31, and for value appeals, the Board of Review is your only option for relief.
You will receive your Assessment Notice the first week of March. Review it for any of the errors above. If you want to appeal the value of your property, you must do so at the Board of Review meeting in March. Your Assessment Notice should tell you the time and place of Board of Review meetings. The Board of Review is required to meet for twelve hours to hear taxpayers' appeals. At least three of these hours must be in the evening.
Put all the information you collected in writing. This will help you organize it in a logical manner. Check with your city or township. They may have a form you need to complete to make an appeal to the Board of Review. Make copies of the completed petition and your letter. You should leave copies of both with them at the meeting. The Board of Review may not give you a decision while you are at their meeting. When they discuss your appeal later, they will have your facts and figures to refer to.
An appeal to the local Board of Review is important and a prerequisite to appealing that Board's decision to the Michigan Tax Tribunal if you contest the Board of Review decision.
It's not necessary to attend the meeting in person. You can send a letter to the Board of Review who will make a determination based on what you present to them. If you have a conflict with their meeting times, a written appeal may be the only way to have your case heard. It's preferable to attend the meeting even when you have put your case in writing. That way the Board of Review can ask you questions about your property. This also ensures your letter isn't simply misplaced.
The Board of Review also meets in July and December after sending summer and winter property tax bills.The only appeals they hear at these times are those based on errors on those bills as well as principal residence exemptions and qualified agricultural exemption matters.
What You Can Do If the Board of Review Does Not Agree With You
Michigan law provides that a property owner can appeal the decision of the Board of Review to the Michigan Tax Tribunal.
This is a long process. It may take as long as three years to conclude. The property owner is required to pay the higher tax rate until that time. If the owner wins the appeal, the additional amount is returned with interest.
You need not accept the value that the local assessor places on your property. Particularly after the purchase of property, there is an opportunity to appeal your assessment to the Board of Review. This is one instance where you can fight city hall.