By Scott Breen, Real Estate, Willingham & Coté, P.C.
Appealing Your Residential and Business Property Taxes
Property tax, tax assessment, appeal, Each year, the city/township assessor determines the “assessed value” of all real estate within its jurisdiction. The assessed value is equal to one half of the fair market value of the property. The “taxable value” (which ultimately determines your property taxes) is then calculated based on this assessment.
After the assessed value (and taxable value) is determined, the local assessor will mail a Notice of Assessment to each property owner during the month of February. This notice will include the assessed value and taxable value of your property, as well as the dates that you may appeal those valuations. If you believe that your assessment (and taxable value) is too high, it may be advantageous to appeal this determination.
The process to appeal real property taxes depends on the type of property involved. The most common types of property are residential, agricultural, commercial, and industrial. The appeal process for each of these classifications is outlined below.
Residential and Agricultural Property
With respect to residential or agricultural real estate, there are two steps to the appeal process. You must first appeal to the local unit of government (e.g., the city or township in which the property is located). These appeals are presented at a very informal meeting with the local government’s Board of Review (and sometimes to both the assessor and then to the Board of Review). The appeals are generally held at the city/township hall during the month of March. At these Board of Review hearings, the property owner should present an appraisal of the real estate or comparable sales information for other properties in the area in order to demonstrate the overvaluation.
If the Board of Review does not sufficiently reduce the assessed value (and corresponding taxable value), you are then permitted to appeal to the Michigan Tax Tribunal on or before July 31. An appeal of residential or agricultural property to the Tax Tribunal is generally assigned to the “Small Claims Division” of the Tribunal that is heard by a referee. The referee then makes a recommendation to the Tax Tribunal Commissioners, who can then either adopt or reject the recommendation. If you prevail at the Tribunal, the local unit of government will be required to return any overpayments along with interest on those amounts.
Commercial and Industrial Property
With respect to commercial and industrial real estate, there is no requirement that the property owner appeal the valuation to the local Board of Review. However, as a matter of strategy, the owner is not prevented from doing so, and this may result in an immediate reduction in the assessment.
The property owner may appeal the assessment directly to the Tax Tribunal. However, the deadline for filing a petition with the Tax Tribunal is May 31. Therefore, if you believe that the assessed value (and corresponding taxable value) is too high, you need to make sure to meet this earlier deadline. Commercial and industrial assessment appeals are assigned to the “Entire Tribunal Division” of the Tax Tribunal. This is a more formal process as compared to the Small Claims Division and is somewhat similar to the procedures of a state court lawsuit. Similar to the residential and agricultural appeals, if the property owner prevails in reducing the taxable value, the local unit of government will be required to return any over payments along with interest on those amounts.
Ongoing Benefits of an Appeal
In 1994, Michigan voters passed “Proposal A,” which limits the amount that taxable value can increase to the rate of inflation or 5%, whichever is less. As a result, if a property owner is successful in significantly reducing the taxable value of the real estate, it can provide reduced taxes for many years into the future. For example, if taxable value is reduced from $200,000 to $150,000, it would take at least six years to get back to its original value.
If you need assistance with filing an appeal of your property taxes, please contact Mr. Scott Breen.