With property tax assessments on the rise across Michigan, now is the time of year to pay attention to the Notice of Assessment, Taxable Valuation and Property Classification that all real estate owners recently received (or will receive soon) from the local taxing authority. The phrase “THIS IS NOT A TAX BILL” will be printed at the top of the notice. While you may be tempted to throw this away, don’t. Rather, you should review this notice carefully because it lists several important categories of information:
The taxable value is the number upon which your property taxes are based. In the year immediately following a transfer of ownership, the taxable value will be the same as the SEV/AV. Until the property is transferred again, the taxable value is capped under Michigan law, which limits yearly increases to 5% or the inflation rate, whichever is less, and adjustments for additions or losses to the property.
The SEV/AV should be a number that is 50% of the property’s true cash value (TCV). True cash value is what the assessor has determined to be the fair market value of the property as of December 31 of the prior year. So for 2022, your SEV/AV is generally 50% of what the assessor has determined to be the fair market value of the property as of December 31, 2021.
If you believe that the actual fair market value of your property is less than twice the taxable value stated on your notice of assessment, or that the assessor made other errors, then you may have a suitable valuation appeal to the Michigan Tax Tribunal. Michigan law requires property owners to satisfy the strict statutory filing deadlines in the Tax Tribunal Act. Moreover, certain types of property must be appealed first to the local assessor and/or board of review in accordance with instructions provided on the notice — which may vary slightly from jurisdiction to jurisdiction. Do not wait to appeal your assessment. If you wait until you receive your summer tax bill, it will be too late.
Remember, voters adopted Proposal A in 1994, which caps the taxable value of your property (subject to the increases described above) for as long as you own the property. Thus, reducing your taxable value through a tax appeal now, even by a relatively small amount, could provide a nice annuity for you in the future even if the real estate market continues to appreciate and your property’s fair market value continues to increase.
If you have any questions concerning your Notice of Assessment or need assistance in determining whether you may have a suitable appeal, please contact Tom Amon or Chris Meyer, partners in Warner’s Real Property Litigation Practice Group.