MICHIGAN PROPERTY TAX APPEAL PROCESS

The window envelope comes from your Municipal Tax Assessor’s office. Your muscles tense. Your thoughts focus. Wasn’t the mortgage company suppose to handle property tax stuff? Who needs another bill. Your adrenaline has kicked in to help you face this “threat.” It sharpens your focus.

​We nervously open the envelope. Its contents scream in large font across the top “THIS IS NOT A TAX BILL.” Relief washes over us as we put the paper down. This is one of the biggest mistakes that homeowners make. Because if you take the time to read and understand this form you will reduce the amount of taxes you pay on your home.

THIS IS NOT A TAX BILL

First year homeowners those who bought in 2017 should pay special attention. If this is the first year owning your home then one of the most important things you can do is to make sure that your property is properly assessed the first year of ownership. Transfer of Ownership is a major taxable event in MIchigan. Transfer of Ownership includes not only purchases but inheritance, divorce, probate, etc.

Ignoring this can cost you thousands of dollars over the life of your home ownership. This will be the only time that your state equalized value (SEV) will be the same as your taxable value. It will greatly impact your cost of ownership due to the “pop-up tax.”

You want your taxable value to start out as low as possible. The only way to get it done is to appeal your property tax assessment. The good news is that it's not hard to do. Since you just bought the house, you probably have all the documentation you need to make an effective appeal.

Appealing your property tax assessment requires evidence and strategy. Should I appeal? What am I appealing? To answer those questions you need to understand the 4 interdependent “VALUES” that control how much property tax you pay. These values change every year. When they go up--as they do more often than not--you will pay more taxes.

Here is a quick overview of the values. Follow the links for more details.

1. True Cash value (TCV) The price your home would sell for in an arms length transaction between a prudent buyer and prudent seller.
   1. reason to appeal True Cash Valuation is too high
   2. You assessment cannot increase because you maintained your home
2. Assessed value (AV) 50% of TCV
   1. reason to appeal Assessed Valuation is too high
3. State Equalized value (SEV) Normally the same as (AV) for residential property
   1. reason to appeal State Equalization Valuation is too high
4. Taxable value  (TV)The value you actually pay taxes on multiplied by your millage rate formula.
   1. reason to appeal Higher than SEV

Proposal A changed everything in 1994. It created the “TAXABLE VALUE.” This is the value that determines how much property tax you will actually pay. This value is independent from the the other three for as long as you own the home.

So if we look at all four, it is the taxable value (TV) that determines our tax paying destiny. The lower we get taxable value,  the less tax we pay. Take note, that you can successfully appeal to lower your SEV, AV and TCV and still not change the amount of taxes you pay. The longer you have owned your home the more likely this is the case.

Taxable values are capped while TCV, AV and SEV are unrestrained. This is how Proposal A insulates homeowners from the risk of rapid property appreciation taxing them out of their homes. It also can create large disparities between TV and SEV for long term homeowners.

So if you cannot get your SEV below your taxable value will not reduce your taxes. Don’t appeal. To lower SEV you must lower AV. To lower AV you must lower TCV. That requires proof of a lower valuation from you.

• Should You Challenge Your Property Tax Assessment in Michigan?
• Procedures for Challenging Your Property Tax Assessment in Michigan

Now that you have decided to appeal your Michigan Property Taxes

1. Visit your municipal assessor with Notice in hand.
   1. Check for correct information
   2. Ask questions
   3. Confirm 12 months or 24 months assessment cycle
2. Appeal to your local Board of Review (BOR). The information on how to do it is on the Notice.
   1. Appealing your tax assessment to a Michigan Board of Review
3. Appeal to Michigan Tax Tribunal Small Claims

Hearing Appeals
The Board of Review is also responsible for hearing appeals of residents who are unable to pay property taxes due to their financial situation. The Board of Review also meets in July and December only to consider hardship applications, correct mistakes, grant hardship exemptions for late filers and to reinstate rescinded exemptions.
There is  a lot of anecdotal evidence of success in appealing property taxes.