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Michigan Real Estate Law: Property Tax Appeals 101

Real Estate Tax Law

Never in the history of the State have we experienced such dramatic reductions in real estate property values; the year-to-year declines in property values since 2007 are unprecedented.  Residents of Saginaw, Bay City, Midland, and surrounding communities have experienced significant declines in property values.

As a result of the recession, municipalities and assessors are placed in a unique and unfamiliar position.  Rather than raising assessments and property taxes to correspond with historical increases in property values, assessors must now find a way to fairly and accurately decrease assessments.  These changes in the real estate market require a change in the way municipal assessors conduct business.

Many homeowners are also experiencing a new and previously unthinkable phenomenon; property taxes are increasing or stable, while property values continue to plummet.  Since 1994 Michigan law prohibits significant increases in taxable value from one year to the next.  Property owners who have not made improvements or transferred property have reaped the benefits of the property tax cap commonly referred to as Proposal A.  No matter how much the value of a property increases each year, its taxable value can only increase by five percent (5%) or the rate of inflation, whichever is lower.

Under Proposal A, property taxes have remained artificially low, or capped, while fair market values have, until 2007, increased significantly.  Proposal A’s method of capping property taxes has created a situation where it is possible for property taxes to actually increase while fair market values fall.  Though this result is sometimes correct, it is not always warranted.

Even longtime homeowners who have enjoyed the benefits of Proposal A’s cap may successfully challenge their tax liability.  Owners of Michigan real estate have the right to appeal their assessments whether they own their homes outright, are paying off a mortgage, or are purchasing under a land contract.  In order to appeal an assessment to the Michigan Tax Tribunal, residential property owners must attend the municipality’s local board of review in March.  An appearance at the local board of review is a prerequisite for taking an appeal to the Michigan Tax Tribunal.

It is important to know your municipalities rules and procedures for the board of review; some communities allow property owners to simply appear at the date and time set for the board of review, while others require an advance appointment.  Your Notice of Assessment will tell you the date, time, place, and procedures for your municipality’s board of review.  If you do not follow these procedures, you will be barred from appealing your property tax liability to the Michigan Tax Tribunal.

There has never been a better opportunity for homeowners throughout Michigan to review and challenge their assessments due to these new economic realities.  Please contact Shinners & Cook today if you would like assistance with your property tax appeal.

 

 

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