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In the not too distant future, Michigan homeowners will receive an official looking document from their city or township titled “Notice of Assessment, Taxable Valuation, and Property Classification.” Bold capital letters in the upper right hand corner will state, THIS IS NOT A TAX BILL. Because it isn’t a bill, many people will simply file it away. Others may skim the document and find that their taxes either didn’t increase or actually decreased. Feeling relief, they too, may file the notice away. But should they?
Before you make a determination to accept the tax assessor’s number or to challenge the assessment, it’s important to understand a few basic terms.
The term “assessed value,” as defined in the Michigan constitution, requires that property be uniformly assessed and that the assessed value should not exceed 50 percent of the usual selling price. This is also known as the true cash value.
The assessed value helps determine the State Equalized Value (SEV). Capped value is the previous year’s taxable value adjusted for inflation. The increase, however, cannot exceed 5 percent.
The lower of the SEV and the capped value determines the taxable value. The statement you open provides all these listed values and tells you what your taxable value will be for this year. You can challenge the values in these reports, but prompt and timely action is necessary.
I recently attended a meeting sponsored by the Real Estate Investors of Oakland to learn what those in the know are saying. In fact, their keynote speaker was an expert on challenging property tax amounts.
From listening to the speaker and other attendees at the dinner, I concluded that some communities throughout southeast Michigan are fairly accurate on their assessments while others may not be. Similarly, some local governments are easy to work with and some are a real challenge.
There were some real eye openers for me at the meeting. Everyone knows we’re in a tough economy. Many people have lost their home to foreclosure, with the keys going to the bank.
For the most part, when a bank resells a home, it’s usually at a significant discount. But the assessors don’t use the lower number to help determine market values. I question this failure because foreclosures certainly impact the market value of the homes in any given area.
When all is said and done, if you believe your tax bill is too large, don’t appeal it just by saying, “My tax bill is to high.” If you want to appeal, preparation and patience are necessary.
There are steps you need to take before facing the board of review. Your local government office has a field card with all the pertinent information the tax assessor used to help determine your tax. Get it and review it.
Before appealing, ascertain the exact area or geographic boundaries used by assessors to determine your taxable value. Then check the comps of recently sold homes in your area.
Property tax issues are complex and appealing them takes plenty of preparation. But if you believe your values are incorrect, you should certainly do your homework and take the appropriate steps to get them corrected.
A final word of advice: Patience. I heard some members say their 2009 appeals were just now being resolved.
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