Local assessors are in the process of sending annual notices of real and personal property tax assessments to property owners/taxpayers, who must determine whether the assessments are correct and whether an appeal should be filed. Here are a few thoughts on that decision and upcoming deadlines.
Annual assessment notices disclose both the “assessed value” and “taxable value” of the property for the present and previous year. The assessed value, which after equalization is referred to as state equalized value (SEV), should not exceed 50% of market value. While a substantial increase in assessed value warrants scrutiny, the assessment can be appealed whether or not it was increased. Recent sales of either the subject property or comparable properties are often persuasive evidence of value. Changes in the condition or obsolescence are sometimes unknown to the assessor or overlooked and can warrant an assessment reduction. If you believe the assessment exceeds 50% of market value, an appeal should be considered.
Assessments should also be uniform. If other competing properties are assessed lower than your property without justification, there may be a uniformity issue which can warrant an assessment reduction.
Assessment appeals for commercial, industrial and developmental real property and commercial, industrial, or utility personal property may be filed in the Tax Tribunal by May 31. For these appeals, a local board of review appeal is now optional. Concerning personal property appeals, the option of skipping the local board of review is conditioned upon the filing of the required personal property statement.
Appeals of agricultural, residential or timber-cutover real property, or agricultural personal property must be preceded by an appeal to the local board of review, and can then be further appealed to the Tax Tribunal by July 31.
The assessment notices also contain the assessor’s classification of real property, either: (1) agricultural, (2) commercial, (3) industrial, (4) residential, (5) timber cut-over, or (6) developmental. Personal property is classified as: (1) agricultural, (2) commercial, (3) industrial, (4) residential, or (5) utility. Classifications are used for three purposes: (i) equalization (typically of little interest to taxpayers); (ii) to determine deadlines for appealing valuation or classification issues; and (iii) classifications control the application of certain exemptions (for example, industrial personal property is exempt from the 6 mill State Education Tax and up to 18 mills of local school district operating millage. Commercial personal property is exempt from up to 12 mills of local school district operating millage). The appeal procedure for classification appeals is different than the appeals procedure for assessment appeals that are based on value or uniformity. Classification appeals are first made at the Local Board of Review in March and further appeal is then allowed to the State Tax Commission by June 30.
A separate post will address Michigan’s new property tax exemption for manufacturing personal property and what action must be taken by February 21 to claim the exemption.
- March (dates vary by jurisdiction) – Appeals to local Boards of Review are a prerequisite to further appeal for residential, agricultural and timber real property assessments to local and property classification appeals. Appeals of other types of property may be made to the Board of review.
- February 21, 2017 – Form 5278 application for exemption of manufacturing personal property.
- February 21, 2017 – This is also the deadline for filing the standard personal property statement Form 4175.
- May 31, 2017 – Assessment appeals to Tax Tribunal for commercial, industrial and developmental real property and commercial, industrial, or utility personal property
- June 30, 2017 – Appeals of classification decisions from Board of Review to State Tax Commission
- July 31, 2017 – Appeals of Board of Review decisions to Tax Tribunal of agricultural, residential or timber-cutover real property, or agricultural personal property