A Lower Property Tax Assessment Means a Lower Tax Bill
How to Appeal Your Property Tax Assessment
Many Boston-Edison residents have homes whose assessed value is greater than current sale prices. If you are one of these residents, you may want to make a case to the City Assessor that your property tax assessment is too high. If you appeal successfully and get a lower City assessment on your house, you may (depending on your Proposition A status) reduce your property tax bill from the City and the County.
The process of appealing is very precise, must be followed to the letter, and takes time. The City is very quick to find any technicality on which to throw out an appeal. Also, a key element of an appeal is actual information on recent sales prices of houses like yours.
A step-by-step overview of how the assessment process works, how you can appeal your assessment, and how HBEA can help you, is given in the section below.
Some additional information can be found on the city's Assessment Division website.
Assessments, Taxes, and How It All Works
How does the Assessed Value on your house determine your property taxes?
Notice of Assessment
In early February every year, the City sends every home owner a "Notice of Assessment, Taxable Valuation, and Property Classification." (Find yours to help you follow along.)
There are three components of the property tax to look at on this form.
- Assessed Value. This generally is equal to the State Equalized Value.
- State Equalized Value (SEV). This is supposed to be equal to 50% of the market value of the house. A house with a market value of $200,000 would have an SEV of $100,000 and, therefore, have an AV of $100,000.
- Taxable Value (TV). Property tax is based on the Taxable Value. Your property tax is your TV times the millage rate.
Your tax is not shown on the "Notice" form. The millage rate also is not shown there. All you see is the Taxable Value. Millage rates are shown on your tax bills.
Your property tax is your TV times the millage rate. In 2008, the City millage rate was 74.5 mills and the County rate was 8.5 mills. On a house with a TV of $100,000, the City tax would be TV times 0.0745 (or 7.45%). That is, $7,450. The County tax would be $850.
In principle, taxable value is supposed to equal assessed value. An owner would pay taxes on the full assessed value of the property. However, in Michigan, this is not always the case. For some owners, the taxable value is less than the assessed value. The reason is Proposition A, enacted in 1994.
Under Proposition A, the State put a cap on how fast your taxable value can go up.
Taxable value cannot increase more than the rate of inflation or 5%, whichever is less.
Assessed value, however, is not capped and can go up by any amount. And it has!
Whether your taxable value is capped or not is crucial.
- If your taxable value IS NOT capped.
If you appeal and get a lower assessed value, this will lower your taxable value and your property tax.
- If your taxable value IS capped.
Appealing your assessed value is unlikely to lower your taxable value or your property tax. But it depends.
Assessed property values fell for 2008 and 2009.
These reductions reflect the decline in housing prices over the past few years. For one house in Boston Edison, the assessment fell 3.5% in 2008, another 14.5% in 2009, and fell a further 18.0% in 2010. Assessed values on that house were unchanged during the two preceding years (2006 and 2007).
How an Appeal Could Lower Your Taxes
First Case: If you have owned your home only a short time, your taxable value may not be capped. In that case, your assessed value and your taxable value are equal. Consequently, if you appeal and get your assessed value lowered, your property taxes will be lower.
Second Case: Your taxable value may be capped, but it may be only slightly lower than your assessed value. In this case, if you appeal and get your assessed value lowered enough, then it would be less than your current taxable value. In such a case, your taxable value also will be reduced to equal the new assessed value. Your taxes will go down.
When an Appeal Would NOT Lower Your Taxes
If you may have owned your house for a long time, then your assessed values probably have increased sharply. However, your taxable values have increased slowly, because the increases are capped. As a consequence, you may see on your "Notice" that your taxable value is far less than your assessed value.
Even if you appeal and get your assessed value reduced, it still is likely to be higher than your taxable value. If your taxable value is not lower, your taxes will not go down.
Indeed, your taxes may go up anyhow! Even if your assessed value has fallen during 2008-10, it still may be far above your taxable value. If so, your taxable value can continue to go up by the amount allowed by Proposition A. And as the taxable value is higher, so is your tax.
Bottom line: your tax goes up even as your assessed value goes down!
This has happened to many long time residents. Keep remembering, however, that even though your tax went up, the cap on your taxable value still is holding your tax below what it otherwise would be.
If your assessed value is twice your taxable value, then without the Proposition A cap, your tax would be twice as high as it is now!
If your taxable value is capped far below your assessed value, then you are not likely to reduce your property tax bill by appealing your assessed value.
When to Appeal
It is important to submit your appeal as soon as possible.
Filing an appeal in this period "is required to protect your right to appear before the March Board of Review." Then, you have to protest at the March Board of Review in order "to protect your right for further appeals to the Michigan State Tax Commission." (Language quoted from the "Notice.")
Here is what this means.
- Step One. You appeal to the Assessors Review.
Your appeal likely will be denied, because the City seems routinely to deny nearly all appeals.
- Step Two. If (when) you are denied, appeal to the March Board of Review.
Since this still is the City, expect to be denied. Hearings are scheduled from March 5 through April 5.
- Step Three. Finally, appeal to the Michigan State Tax Commission.
This is where you have the best chance. The Commission seems willing to actually make decisions.
The deadline for filing is June 30. You will get further instructions.
The Commission is scheduled to meet July 20 and December 14.
You must follow the procedure carefully and exactly.
You must be patient and persistent.
The Appeal Process
Appeal to the Assessors Review Board, either in person or by writing a letter.
If You Appeal In Person.
You may go to the Assessor's Office in person to appeal your assessment.
Room 804, Coleman A. Young Municipal Center
2 Woodward Avenue.
In Room 804, request form "Petition to City of Detroit 2010 Assessors Review". When you have completed it, you will be sent to Room 805 to meet with an assessor, who will hear your case on the spot.
**Even if you appear in person to protest, taking a letter to submit is advised. This gives you a chance to set out your case carefully and in full before arriving there.
If You Appeal By Letter.
Address the letter to:
Room 804 Coleman A. Young Municipal Building
2 Woodward Avenue
Detroit, MI 48226
The letter must be postmarked by February 15.
Include the Property Identification
There is a number on the same line as the property address.
Below that is a detailed legal description of the property.
Include ALL of it verbatim.
Be sure to identify yourself as the person on the Assessment Roll (i.e., the person to whom the "Notice" is addressed.)
Whichever Appeal Method You Use.
At this stage of the appeal, all you have to state is that you protest your assessment and that you are appealing for a reassessment.
Within 2 to 3 weeks, the Assessor's Office will mail a letter indicating a reduction of taxes or a rejection of your Petition.
The Assessors Office will also give you an appointment to present your case to the March Board of Review (step two). If you are dissatisfied with the Assessors letter, follow the instructions in the letter to appeal your case with the March Board of Review.
The City Assessors Review in Step One is expected to deny virtually all requests, although sometimes an argument based on "obsolescence" will work.
The next step is to appeal to the March Review Board. In the letter from the Assessor's Office, you will be given a date and time to present your case to the March Board of Review.
You must appear in person to present your case.
The March Review Board in Step Two also is expected to deny virtually all requests.
If you do not agree with the Board of Review's determination, you may appeal to the State of Michigan Tribunal prior to June 30, 2010. Here is where you have a better chance. Your goal is to get your appeal to this stage.
If the March Review Board denies your appeal, you will receive instructions about how to appeal to the Tribunal.
Making the Case That Your House is Over-Assessed
You will present the case that your house is over-assessed when you make a personal appearance before the Assessors Review.
The case that the assessed value of your house is too high is a comparative case. If your house is over-assessed, it is because the assessor is using a market value for your house that is too high.
In order to show that the market value is too high, you need to have recent sales price data on comparable houses to yours. How recent? Your State Equalized Value for 2010 is based on sales prices from September 30, 2008, through October 1, 2009.
To make the case that your house is over-assessed, you may present evidence of sales during the September 2008 through October 2009 period that support a lower assessed value of your home. You may not include prices at which banks reclaim properties through foreclosures. However, bank sales to individual owners can be included.
In making your case, you do have to compare apples to apples. That is, you have to show sales prices for houses of comparable size to yours. To do this, your best bet is to contact a friendly Realtor (although you may be able to research online).
Private Appraised Value. In addition to or instead of making a comparitive case, you may hire an appraiser to provide a market value of your home. However, the assessor has the option of disregarding the appraisal on the basis that the paid appraiser lacks objectivity.
There are three general cases which you might fall into:
CASE 1: You have NOT just purchased your home, but have owned it a while.
With the sales price data, you can see how your assessed value compares to sales prices of comparable houses. From that, make your argument that the assessment is too high.
REMEMBER: the Assessed Value is supposed to be 50% of the Market Value.
- The market value that the assessor has used to compute your assessed value is twice the assessed value on your house.
- Recent sales prices may be less than your assessed value.
- But those sale prices may be far less than the market value that the assessor has given to your house.
- You can argue that the assessed value should be half the recent sales prices for comparable houses.
For example, suppose you have a four bedroom house with 2-1/2 bathrooms and 3500 square feet that has an assessed value of $100,000. The assessor has used a market value of $200,000. If the recent sales prices for comparable homes near yours suggest that the market value of your home is $120,000, then you could argue that your assessed value should be $60,000.
Two More Things to Remember.
- In support of your argument, you also can report the number of vacant houses on your block, because those are holding down house prices. List addresses.
- Perhaps you have had an extraordinary event such as a fire or flood that has damaged your home. See Case Three below.
The assessed value on my home is too high because it is far out of line with recent sale prices of comparable houses in my neighborhood. My house has #### square feet of finished space, including # bedrooms and # bathrooms.
Attached is a list of comparable houses in my neighborhood and the prices at which they recently have sold.
As is plainly obvious, the current sales prices of comparable houses is far below the value given to my house in the Assessed Value. From those data, the market value of my house appears to be $##,###. Since the Assessed Value is supposed to be 50% of the market value, the market value of my house implies that the Assessed Value should be $##,###.
Vacant houses on my block depress the market value of my house. The following houses are vacant:
CASE 2: You have recently purchased your home.
Make the case that the price you actually paid for the house obviously is its market value!!
CASE 3: "Obsolescence." This could apply to either of the first two cases.
"Obsolescence" is the term that applies to a home that has had damage that would reduce the market value of the home.
This kind of appeal sometimes has had success with the Assessor.
TAKE PICTURES that show the condition of the house.
If you have owned the home (first case), perhaps you have had an extraordinary event such as a fire or flood that has damaged your home. Use the pictures in making your case that the market value of your home needs to be re-assessed.
If you have just purchased a home (second case), perhaps this house was damaged before you bought it and needs extensive repairs, which is why you got it at a low price. Use the pictures in making your case that the market value is what you paid for the house.
Obtaining Recent Sales Prices for Comparable Homes
Sales prices for houses comparable to yours can be sent to you.
A list of sales prices in Boston Edison has been compiled for the past three years.
To request this data, submit the following information.
- Your name and the Boston Edison street address of your house.
- The number of bedrooms and bathrooms in your house.
- The approximate square footage of the finished space in your home. Take the time to get a close estimate because your appeal depends on it!
You can submit your request in two ways.
- E-mail Boston Edison at email@example.com .
- Call the Boston Edison voice mail at (313) 883-4360 and leave the information.
DO THIS NOW. It takes time to compile the information and deliver it to you.
DON'T WAIT until the last minute, please.
Sales price information on comparable houses will be sent to you in a form that you can attach to your appeal letter and use in your appearance during the appeal meeting.