If you have never looked at your property tax bill and cringed, I commend you. I know of no one who enjoys paying taxes of any kind. While property taxes are inevitable, I will help you understand what your property tax documents mean and evaluate whether you are paying too much. Below is a step-by-step guide that explains how.
How much am I paying for property taxes? For the answer, go to one of two sources. If the county where the property is located has online services (Kent County does), go to the online database and review the actual tax bills. If not, get a ballpark estimate at treas-secure.state.mi.us/ptestimator/PTEstimator.asp. When estimating property taxes for a homestead, the approximate amount paid is the first estimated amount shown. The estimated property tax amount for non-homestead property is the second estimated amount.
How do I know if I am paying too much? The key to answering this question begins by looking at your Notice of Assessment (the “Notice”). A sample Notice is found at: michigan.gov/documents/treasury/1019f_504168_7.pdf. Typically, Notices of Assessment are sent in January each year. The important number to look for on your assessment notice is the taxable value. This is the number from which your property taxes are calculated. First, locate the taxable value on the Notice on line 1 in the second column. Now, follow the easy steps below.
Step 1: Multiply the current taxable value by two. If this amount is equal to or lower than the property’s fair market value, you are probably paying what you should.
Step 2: If the value from Step 1 is only a little higher than fair market value, it may not be worth further investigation. Otherwise, proceed to Step 3.
Step 3: To investigate further, get a cost estimate for a property appraisal. If the estimate is more than you want to spend, gather sales data of comparable properties. Sometimes a realtor can help you with this. If the data confirms the disparity between two times the taxable value and the fair market value of your property, you can proceed to Step 4. If an appraisal confirms a significant disparity, you now have a solid basis for a property tax appeal.
Step 4: Timing is critical in the property tax appeal process and differs based on communities and on the property’s classification. Some communities require an initial appeal to their assessor within several weeks after receiving the Notice of Assessment. (For example, the city of Grand Rapids and the city of Kentwood require this.) Assessments of properties classified as residential and agricultural must also be appealed to the local March Board of Review. This process is taking place right now. If the deadlines have passed for this year, but you believe you have been overtaxed, you can prepare for an appeal next year.
Step 5: The final step is an assessment appeal to the Michigan Tax Tribunal within certain time periods depending on the property’s classification. The Tribunal’s small claims division can be used for disputes with lower dollar amounts. Larger disputes must be filed with the “full” Tribunal.
Whether small claims or full Tribunal, a property tax attorney can be hired to assist you.