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I Thought the New Tax Law was a Tax Cut: Implications on Real Property Taxes and Appeal Rights

If you or your business own real property in the City of Detroit, and you did not appeal your property taxes in 2017, you should note one important fact. As part of the new Detroit revenue raising initiative, each and every parcel of real property, whether home or business, was reassessed. The City believed that it undervalued the properties in Detroit for many years, and, in conjunction with the revitalization efforts and District Detroit, it now feels that your real property is more valuable, regardless of location. This should give you additional incentive to appeal the property tax. It is highly likely that you were over-assessed in 2017 and now, in 2018 have an inflated property tax bill. It is not too late; you can still challenge the 2018 assessment, which will have a prospective effect.
In Michigan, if you own real property -- including residential, commercial or industrial -- before March of each year, you receive a tax assessment notice from your friendly local assessor’s office. This notice details the previous year’s property tax, assessed value, state equalized value, and taxable value along with the increase (or decrease) in each category for the current year. When you receive the notice, you likely ask yourself, “Do I pay too much in property tax?” Most businesses and individuals simply accept the taxable value on its face and believe that because the assessor’s office believes a certain amount of tax is owed, it must be correct. But, you actually have options; you need not be a sheep in the herd. Appeal, appeal, appeal! As a practical matter, the municipality does not have the resources to appraise each and every property within its jurisdiction. Consequently, many properties are over-assessed based upon the bare minimum comparable data.
So how do you appeal the assessment? First, you should talk with your real estate and tax professional. If you own residential property, the first step is to appeal to the local board of review. In most cases, the board of review will uphold the assessor’s office’s determination. There is, however, the exception when the board accepts your proposed changes. You must appeal to your local board by the date set forth in the notice. Each jurisdiction holds hearings on different and varying dates, but always in March. If the board agrees with the assessor, you may file a petition with the Michigan Tax Tribunal for a redetermination of taxable value, classification, special assessment, among others. The petition must be filed no later than May 31 of the year in question. For business property, although you may file with the local board, you are permitted to appeal directly to the Tax Tribunal by May 31.
Property taxes are real dollars coming out of your pocket each year. Additionally, for individuals, the Tax Cuts and Jobs Act of 2017 limits your deduction, if you itemize deductions on your tax return using Schedule A, to $10,000 in the aggregate. So, it’s a Detroit double-whammy: increased property taxes with a limitation on the deductibility for federal tax purposes. If your property was over-assessed, or you believe it might be, you should contact your tax and real estate professional before it’s too late.