DEARBORN — It’s that time of year again. Local residents and business owners are receiving property tax notices of assessment. After three years of a battered real estate market, many suspect that they are being overtaxed on inflated property values.
If you own a home or business you will receive a letter in the mail called a “Notice of Assessment.” The deadline to appeal your tax assessment and lower your tax bill is fast approaching. In a matter of a few short weeks, your chance to appeal your assessment will be gone for another year.
With a detailed and powerful property value analysis to submit and refer to during your appeal, you will be in a strong position to request and receive a reduction in your assessment.
Property Taxes in Michigan
Michigan law requires that every property owner be mailed an annual notice of assessment, which contains the jurisdiction’s assessment of how much your property is worth. This number is reflected in the state equalized value (SEV). The SEV in Michigan is calculated as half of the current market value of your property. Your taxes are then calculated by multiplying the current “millage rate” of your jurisdiction by the taxable value, and this is how your annual tax bill is calculated. Thus, when the market value of your property falls, the taxable value and ultimately your annual property tax bill should likewise fall. Unfortunately, this isn’t always the case.
Cash-strapped municipalities have not always accurately assessed property values. In my opinion, many houses are being assessed at rates up to 30% higher than their current market value. The tax assessor’s office is not at fault. They generally do their best to fairly assess your property. Unfortunately, there are just too many properties and the assessors are too far removed from the actual market data on a real time basis to get the right assessment on every property.
In recognition of possible inequities in your tax assessment, state legislators have afforded you the right to appeal your assessment. During the appeal, you have the right to submit documentation proving the current fair market value of your property. The most persuasive documentation is evidence of the recent sales that are most similar to your home. This evidence usually takes the form of a professionally prepared property value analysis, or PVA. This PVA analysis is the most convincing evidence of the current fair market value because it is a detailed analysis of current market conditions prepared by a licensed professional working in the field. Even if during your appeal, the local board of review does not agree to reduce your assessment, having a PVA will keep you in a much stronger position should you decide to appeal their decision to the Michigan tax tribunal.
The costs of an over-assessment are usually huge. Take this HYPOTHETICAL example.
FamilyA owns a home that they are almost sure is worth no more than 100,000. They have been hearing about recent sales in the neighborhood and know that they have taken a hit on their home’s market value. Unfortunately, Family A receives a property value assessment from the city of Dearborn Heights which states their home’s SEV (1/2 of the market value) is $60,000. Thus, the city’s assessment means Family A is paying taxes on a house that is worth $120,000, when they think it’s worth $100,000. Family A is usually not sure how to prove they are being overtaxed. Family A should now file an appeal, and use a professionally prepared property value analysis (PVA), including the most accurate, non-distressed comparable sales in his area, to prove that his house is really only worth $100,000. If Family A timely and successfully appeals the city’s assessment, and the property is revalued at $100,000, they will have saved 16% on their tax bill this year and every year going forward. This could easily add up to thousands of dollars even on a lower decrease of 5%-10% in the tax assessment.
If you are pretty sure you are being over-taxed, filing an appeal is definitely a good idea, and being prepared to make your case is absolutely essential. Don’t make the mistake of going in to an appeal empty-handed. In these economic times, the board of review knows how much their city needs your money, and they will be hard-pressed to order a reduction in your taxes without some sort of evidence on paper.
Armed with a property value analysis (PVA) and the know-how, you will be better prepared to obtain an accurate assessment, and hopefully save hundreds and even thousands of dollars on your annual property tax bill.
Team Baydoun can help you in this process. While we do not actually represent you in the appeal, as an attorney may do for thousands of dollars, we can give you what you need most, a professional opinion of the market value of your property, backed by hard facts and comparable sales statistics. This can be submitted to your local board of review whether or not you request a formal hearing, and must be considered by the board as evidence that your property has been over-valued and that you are being over-taxed. Our professional service includes a detailed analysis of your property’s value, addressed directly to the criteria used at the board of review and print-outs of the most accurate comparable, non-distressed sales and data in your area.