It's time for board of review again. It is smart to automatically check your assessment. Your home's taxable value is typically capped and will be uncapped at the time property is bought and sold. Recent purchasers should be alert.
Because township assessments are based on historic property sales, it is not uncommon for neighborhoods to show higher taxable values than property is typically selling for today. It is not unusual for the tax bills and taxable value to continue to rise, even though real property values in the neighborhood are falling. There's a gap usually between taxable and assessed value.
Tax bills should fall when assessed value falls below the prior year taxable value. Business purchasers need to be especially careful, too. A business income projection can be grossly overstated if property tax expenses are calculated on the historic taxable value. Like residential neighborhoods, the business taxable value is uncapped upon transfer.
Property owners should be very aware of their assessments, particularly if they have recently purchased their homes or businesses. A spot check of one township's assessments for parcels sold in 2006 indicated six out of 18 properties had assessments that were 15 percent (or more) higher than 50 percent of the recorded sale price. These properties may be over-assessed. The recommended procedures for addressing these value related issues are as follows:
1. Check your assessment change notice and note the dates and times for when the Board of Review will be in session.
2. Compare the current year's Assessed Value (on the notice of assessment change) with the purchase price. If the Assessed Value is more than half of the purchase price, an appearance or letter to the Board of Review will be necessary. Many townships permit appeals by mail. You must appeal to the Board of Review, or further appeals are prohibited.
3. Compare the determination of the Board of Review with the purchase price. If the Board's decision is not in line with half the purchase price, contact the Michigan Tax Tribunal and obtain an appeal form. File this form prior to June 30.
An individual can often accomplish a significant reduction in property taxes without professional assistance. Because of the cap on taxable value, any reduction will be proportionately held in force for the following years. The cumulative tax savings over time can be very significant.
Boards of Review usually don't feel married to the assessor's value estimate and may be more willing to adjust an assessment downward toward a recent purchase price. If you haven't purchased your property recently, you can find sales in your neighborhood in the assessor's records.
Market conditions are changing rapidly and I've seen taxpayers save thousands of dollars per year simply by being aware of their property tax status and taking the necessary steps.
About the Author: John S. Porter is a Certified General Appraiser and manager of Certified Appraiser, LLC of Traverse City. He was a Level III Assessor for 25 years. He is a former East Bay Township supervisor.
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