Help Me Understand and Appeal My Property Taxes
It’s that time of year when local assessors are completing their valuation of your home and sending out the annual Notice of Assessment. This article can help you understand the terms on your statement and give you the tools to appeal your property tax assessment if you feel it is too high.
What is the State Equalized Value (SEV)?
There are two primary figures on your Notice. The number we are most familiar with is the State Equalized Value. This number is equal to approximately half of the market value of your home. Assessors use a 12 month sales study and look at sales data in your neighborhood during that time to determine the market value of your home. You may see annual changes in your SEV that follow the sales market. You may also see changes in your SEV if you add onto or modify your home during the year.
What is the Taxable Value (TV)
Your property taxes are actually based on the Taxable Value of your home. In the year of a sale or transfer the TV is set equal to the SEV. From that point the TV is independent of the SEV. In 1994, Michigan voters approved Proposal A that linked the taxable value to the Consumer Price Index, or the annual national inflation rate from October to October. Consequently, the taxable value of your home increases each year with inflation, but there is a cap of 5% and it can never increase above your SEV. Over the past few years, Michigan residents have seen taxable values increase annually from 2% to 4% even while assessed values were declining.
How can my property taxes go up?
Since SEV is based on market appreciation and taxable value is based on inflation, these numbers can go up and down independently. In years when the market appreciation was strong, SEV increased by more than the gradual increases in TV and likely created a large difference between the two numbers. Your SEV may now decline along with the market, however unless your SEV decreases to such a point that it is lower than your TV, the TV will still increase with the annual inflation factor.
Should I appeal my property taxes?
Property taxes are significant and it is important to look at ways of reducing this expense just like you do any other bill. If you think that your property is being valued too high, you can appeal the SEV with your tax authority. You will have the greatest chance of affecting your property taxes if the SEV and TV are close together in value. If there is a large gap and the SEV greatly exceeds the TV, you may succeed in lowering the SEV but this will not have an impact on the TV. For example, if your SEV is $100,000 and TV is $99,000, getting a reduction in the SEV will also impact the TV and lower your taxes. However, if you have owned your home a long time and the SEV is $100,000 while the TV is $82,000, unless you are able to lower the SEV below $82,000, it will not have an impact on your TV or tax obligation.
How do I appeal my taxes?
Read your Notice of Assessment that you receive in the mail. On the notice will be instructions on how to appeal. It is an easy process but must be followed very specifically. Generally, you must file a form stating your intent to appeal and then you will be given an appointment to appear before the Property Tax Board of Appeals. The Boards generally meet in early March. You may have from 5 to 15 minutes to present your appeal to the Board. COME PREPARED! The Board is a panel of your peers and they must have a documented reason to change the value on your home set by the assessor. Results of the Board’s decision will be mailed to you following the hearing. If you still disagree with the assessment you will have to make an appeal with the Tax Tribunal in Lansing.
What documentation should I bring to my appeal?
The appeal Board is comprised of members of the community. They may not be familiar with your home and they have a short amount of time to hear each appeal and make a decision. So make it easy for them and BE KIND. Bring photos of your house, comparable sales data from your neighborhood, evidence of needed repairs that may affect the value of your home, and best of all….an appraisal. You must be specific and state what you believe to be the market value of your home. General or irrelevant data will not be considered.
Can I get help? Yes!!!
You can ask a Realtor familiar with your neighborhood to help you determine the market selling price of your home. You can also hire an appraiser for around $300. NOTE: if you RECENTLY REFINANCED YOUR HOME to take advantage of exceptionally low interest rates your lender will already have a recent appraisal on file that you can copy. You can also get information from great real estate and local websites. Good luck and don’t be scared of your Taxes!!