2011 property tax appeals
TRANSCRIPT
Property Tax Appeals2011 Filing Information
Appealing A Property
Tax Assessment
Contact Information
David E. Nykanen(248) [email protected]
Follow on Twitter: @miproptaxConnect on LinkedIn:
www.linkedin.com/in/davidnykanen
Disclaimer
This presentation provides general information at a general level. It is not specific legal advice, and you should always consult with your attorney before taking any actions.
You should not rely upon the information in this presentation in taking any specific actions.
Why Does It Take So Long To Appeal Taxes? There are currently 14,236 cases pending on
the “Entire Tribunal” docket. There are 7 Judges.
There are currently 28,558 cases pending on the Small Claims Division docket.
Deadlines for 2011
For property classified as commercial or industrial, a Petition must be filed on or before May 31, 2011.
For property classified as residential or agricultural, a Petition must be filed on or before July 31, 2011.
Your Property Taxes
In Michigan, your property taxes are calculated by multiplying the Taxable Value, by the applicable millage (tax) rate.
The millage rate varies from community to community.
For a principal residence, the millage rate is reduced by (generally) 18 mills, as the Principal Residence Exemption applies.
Proposal A and Taxable Value
In 1994, the Michigan voters enacted Proposal A, which (among other things) introduced the concept of Taxable Value. Now, even though the State Equalized Value can go up (or down) by any amount each year, the Taxable Value can only increase by the lesser of 5% or the rate of inflation from year to year. In addition, the Taxable Value can never be higher than the State Equalized Value.
Taxable Value vs. State Equalized Value
Prior to 1994, the millage rate was multiplied by the State Equalized Value. After 1994, the millage rate is multiplied by the Taxable Value.
The State Equalized Value can go up, or down, by any amount each year. SEV is supposed to represent 50% of the “true cash value” of the property, which is, essentially, the market value.
Taxable Value, continued
Unlike the State Equalized Value, the Taxable Value increases by a fixed amount each year. The Taxable Value increase by the lesser of 5% or the rate of inflation, each year. Since 1994, the rate of inflation each year has been below 5%.
For 2011, the Taxable Value will increase from the 2010 Taxable Value by 1.7%.
The “Gap” Between SEV and TV
0
50000
100000
150000
200000
250000
Years
The Notice of Assessed Valuation
Your Notice of Assessed Valuation, which you should have received in early February, will show two values: A Taxable Value, and an Assessed Value (and proposed State Equalized Value).
If you did not receive the Notice of Assessed Valuation, you should immediately call your local assessor, and obtain a copy.
The Notice of Assessed Valuation
The State Equalized Value should be equal to 50% of the value of your property.
The Taxable Value should be equal to the LESSER of: (a) the 2011 State Equalized Value; or (b) the 2010 Taxable Value multiplied by 1.017. (This is because the rate of inflation used to calculate the Taxable Value for 2011 was 1.7%.)
What If I Just Purchased/Transferred My Property? If you purchased or transferred your property
in 2010, the Taxable Value for 2011 will be equal to your State Equalized Value for 2011. There is no “cap” on the increase of the Taxable Value for the year after a “transfer.”
What If I Just Purchased/Transferred My Property? Whether you “transferred” your property in
2010 can be a relatively complicated issue. If your Notice of Assessed Valuation shows you transferred your property in 2010, and you are unclear why, you should contact the assessor and/or a property tax attorney to evaluate this issue fully.
Why Might My Taxable Value Increase When My SEV Decreases? The Taxable Value of your property increases each
year by the lesser of 5% or the rate of inflation (1.7%for 2010 to 2011), until the Taxable Value is equal to or exceeds your State Equalized Value.
In theory, for past years, you have essentially paid taxes based on a value that is less than the actual value of your property. Until the Taxable Value reaches the State Equalized Value, the Taxable Value will continue to increase.
Will Appealing My Assessment Lower My Taxes? Unless you can demonstrate that the State
Equalized Value should be lowered to an amount lower than your Taxable Value, an assessment of your assessment will likely NOT lower your tax bill.
In other words, unless you can demonstrate that the value of your property is less than twice the value of your Taxable Value, an appeal of your assessment may be a futile effort.
Some Types of Appeals:
Residential/Agricultural Real Estate Assessment. Commercial/Industrial Real Estate Assessment. Uncapping of the Taxable Value. Omitted Property. Personal Property. Classification of Property.
Did I Have To Go To Board of Review?
Beginning in 2007, you were only REQUIRED to go to Board of Review for the following classifications of property:
2. Residential
3. Agricultural
Did I Have To Go To Board of Review?
You are still allowed to attend Board of Review for other classifications, but you are not required to do so.
If you go to the Board of Review, you will have to complete a Petition before you appear at the Board of Review.
Timeline For Commercial/Industrial Appeals February: Receive Notice of Assessed Valuation. Mid-February: If in City of Detroit, Wyandotte, or
several other Michigan communities, POSSIBLY REQUIRED appearance for Assessor’s Review
March: OPTIONAL appearance at Board of Review May 31: Deadline to file a Petition with the Michigan
Tax Tribunal. June 1: Deadline to receive decision from Board of
Review.
The Michigan Tax Tribunal
The Michigan Tax Tribunal is the exclusive venue to challenge your property tax assessment.
If you do not receive relief at the local Board of Review, the ONLY avenue you can pursue to challenge your assessment is to file a petition before the Michigan Tax Tribunal.
The Michigan Property Tax Appeal Forum
Once a Petition is filed in the Michigan Tax Tribunal, the litigation is “generally” like any other litigation.
You will obtain a “tax refund” only if the State Equalized Valuation is lowered BELOW the Taxable Value.
Why Is The Tax Tribunal “Different”?
The Tribunal is made up of seven members, who are appointed by the governor:
-Attorneys
-Level 4 Assessor
-Appraisers
-Certified Public Accountant
-At-large members (must have 5 years experience in state and local tax matters)
More Tax Tribunal Makeup Information
One of the members is designated as the chairperson.
The chairperson assigns matters for hearings, and performs other designated duties.
The Tribunal also has a clerk.
Process Before The “Entire” Tribunal
File Petition. Answer filed by municipality. Counsel conference is required. Pre-Valuation Disclosure Discovery is held. (Depositions by
leave only) Motions may be filed. Prehearing General Call. Valuation Experts Identified. Valuation Disclosures Exchanged. Post-Valuatio Disclosure Discovery is held. Prehearing Conference. Hearing. Opinion and Judgment.
What Is A Valuation Disclosure?
Before the Entire Tribunal, you should be prepared to spend a fair amount on a full-fledged appraisal.
This isn’t a mortgage appraisal. This isn’t a real estate agent’s valuation. This is a lengthy, well-researched, litigation-worthy document.
How Long Will This Take?
Small Claims Division: You should not expect to receive a final decision for AT LEAST two years after you file your appeal.
Entire Tribunal: You should not expect to receive a final decision for AT LEAST three years after you file your appeal.
However, you do receive a small percentage of interest on your refund if you are successful (Note: “small” is the operative word.)
Why Will This Take So Long?
There are only seven Tribunal judges. There are over 14,000 cases pending in the Entire Tribunal. That means there are OVER 2,000 cases pending PER JUDGE. If a hearing takes approximately two days, even if 90% of the cases settled, that means each Judge has well over a ONE YEAR backlog, even if all the Judge did was hold hearings.
That does not even account for the time needed for deciding motions, or, most importantly, writing opinions after the hearings.
Contact Information
David E. Nykanen(248) [email protected]
Follow on Twitter: @miproptaxConnect on LinkedIn:
www.linkedin.com/in/davidnykanen