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Michigan Residential Property Tax Appeals

By Brett Cummings

People across Southwest Michigan are experiencing significant property devaluation stemming from extensive flooding. Even properties not directly damaged by the flooding are experiencing property devaluation resulting from the stigma of the area and speculation that it could get worse before it gets better. Over the past several weeks, many affected individuals contacted me asking whether they can: 1) refuse to pay their current property tax bill, 2) pay under protest, or 3) fight their taxes until something is done. This article is going to focus on the latter, but I will quickly address the first two options.

Not paying your property taxes will result in fees, interest, penalties, and possibly even losing your property to property tax foreclosure if you fail to pay for more than two years (MCL 211.1 et seq). Paying your property taxes under protest is not legally recognized in Michigan and will therefore have no effect on your underlying tax obligation.

The Appeal Process

A. The Annual Assessment Notice

In the next few weeks, the tax assessors will mail a Notice of Assessment, Taxable Valuation, and Property Classification to each property owner (hereafter referred to as the “Notice”). At the top of the page, it will say “THIS IS NOT A TAX BILL.” This document is frequently thrown in the trash without review by most homeowners because, after all, it says it’s not a bill. The Notice is important because it states what the “assessed value” and “taxable value” of the property will be for the current tax year – the basis upon which the amount of your property tax is determined.

The assessed value should be ½ of the true cash value of the property. The true cash value is defined as “the usual selling price at a place where the property to which the term is applied is at the time of the assessment” (MCL 211.27). For the purpose of this article, we will assume true cash value is synonymous with the value you could sell your property for as of December 31 of the preceding year, but please understand that it is a little more complicated than that. That means if the assessed value on your Notice says $200,000, the local assessor believes the true cash value of your property to be $400,000.

The taxable value is multiplied by the local millage rate to determine the property’s tax liability. The taxable value can only increase annually by the rate of inflation or 5%, whichever is lower (unless uncapped, which is beyond the scope of this article). As a result, properties that are owned by the same person(s) for long periods of time have a disproportionate ratio of assessed value versus the taxable value (i.e. their tax liability is much less than the value of the property reflects). If the taxable value is less than ½ of what you believe the true cash value of your property to be, it is likely not worth your time and energy to appeal your taxes.

If you believe there are errors in the Notice (for example the assessed value listed is more than half of what you believe your property is worth), you can appeal the Assessment.  Please understand that this does not relieve you from your obligation to pay your taxes. You must still pay your taxes; however, if you prevail in your appeal, you will receive a refund with interest. Please also note that you cannot appeal prior years; you may only appeal the current year (and future years).

B. The March Board of Review

There are exceptions, but generally to pursue a property tax appeal, you must first file a petition to the March Board of Review (typically held the first or second week of March).  This is filed at the Township level for many townships like Texas Township and at the City level for places like Portage and Kalamazoo. Your notice will include the address and deadline for your petition. To be successful at the March Board of Review, you need to present evidence supporting your claim. For example, if you claim that your property is over assessed, you need to provide evidence that the true cash value is less than double the assessed value. If you receive the outcome you desire from the March Board of Review, you need not go further. However, if you don’t receive the outcome you desire, all is not lost. The next step will be an appeal to the Michigan Tax Tribunal.

C. The Michigan Tax Tribunal

The Michigan Tax Tribunal has two divisions: the full tribunal, and the small claims division. This article will only address the small claims division since it has jurisdiction over a proceeding in which residential property is involved. All petitions to the Tax Tribunal for residential property are due on or before July 31st of the relevant tax year.

The Tax Tribunal will assign your petition to the docket and serve the docket notice on the tax assessor. The tax assessor has 28 days to file an answer or risk being found in default. Thereafter, the parties may engage in discovery related to the valuation of the property and it’s possible for certain motions to be filed (although quite rare in the small claims division). The Tax Tribunal will set the matter for an in-person hearing at some point in the ensuing months with a Tax Tribunal judge presiding. 

In my experience, the hearings are typically noticed out for some time between January and March of the following year after the subject Notice was sent; however, this is largely dependent on the docket and management of the Tribunal.

D. Conclusion

This is not a quick process, and while it may seem daunting at first, many people are successful in appealing their taxes if they are adequately prepared and have the requisite evidence to support their claim. Keilen Law has experienced real estate attorneys that can help you navigate the nuances of property tax appeals and any other real estate needs you may have. For a free initial consultation, please call (269) 382-4818.