Each year, usually in early February, every property owner will receive a notice from their city or township assessor that says in bright red letters: “This Is Not a Bill”. This notice is sent, not because the assessor wants to do so, but rather because every municipal assessor is required by statute to “estimate, according to his or her best information and judgment, the true cash value and assessed value of every parcel of real property [in their city or township].” The purpose of this assessment is to determine the property owner’s tax bill for that calendar year.
While technically, “This Is Not a Bill” is true, if you do not challenge the information in this document, you lose the opportunity to argue about the tax bills you do receive in July and December of that year. No wonder they tell you it is not a bill!
Property owners have an opportunity to challenge the assessment, if they act quickly. In the current environment, many homeowners are content to see that the assessor has lowered their assessment, believing that they have no option but to accept what the assessor has assigned as the valuation. However, even if an assessment is lowered, the taxes are not necessarily lowered and the assessment may still be too high.
Why Should I Challenge the Assessment?
- Taxes are based upon the properties’ taxable value, which may or may not be the same as the assessed value. However, if the taxable value is at or near the assessed value, a reduction in the assessed value will result in a reduction in taxes.
- If you successfully challenge the assessment, your tax savings over several years will be substantial. You should not look at it as a single year’s savings. Because of the caps in place on the increases in taxable value, a reduction this year may provide substantial benefits for many years to come.
- A lower SEV may make your property more attractive to potential purchasers if it is on the market. A lower SEV means that the new taxes (once they are uncapped after a sale) will be lower than otherwise.
- By challenging this year’s assessment, if property values continue to drop, in the future it will be easier to reduce the assessed value again down to the true value of the property.
- “But my assessed value went down automatically.” Yes, assessors have finally realized that property values are declining. But if last year’s value was too high and it is reduced this year, does the new value accurately reflect the true cash value? Probably not.
How Do I Challenge the Assessment?
Each municipality has their own procedure; however, common among them is that you must appeal the assessment by the deadline set by the assessor. This may be as little as 3 or 4 weeks, depending upon the time the assessments are mailed. Most municipalities will allow you to place a phone call to obtain an appointment. At the scheduled date, you will appear before the board of review where you have the opportunity to present evidence (yes evidence!) to support what you believe the correct valuation should be. The biggest mistake homeowners make is not being sufficiently prepared to present evidence of the true value of their property. A listing of homes that sold in the area and the price at which they sold is not sufficient. At a minimum, a spreadsheet listing three comparable properties that have recently sold and their sales prices, along with distinguishing features of each property (square footage, bedrooms, bathrooms, garage, etc.) will be required. (The City of Birmingham has a sample form on its website to use for this purpose.)
If you only want to vent and are prepared to have your request simply denied by the board of review, the above procedure is fine. You will not spend any money; however, cutting corners like that will not give you the greatest chance at winning.
How Do I Increase My Chances of Prevailing?
Having hard facts – an appraisal instead of a list of comparable properties – and the ability to support the facts in the appraisal will make it more likely that you will win your appeal. Knowing whether the assessor takes into account foreclosure sales or sales of bank-owned properties is necessary. Knowing what other properties that have sold that are not contained on the comparables on the appraisal, and why they are not included, may also be important. Then, you must make a strong presentation based upon this evidence and answer the questions of the board of review. In essence, you are putting together a “case” just as a lawyer would and by supporting your case with strong evidence, you are more likely to have positive results. However, it is just as important to anticipate the assessor’s case as well. If you are prepared ahead of time with the proper documentation and argument, you increase your chances of winning.
Is It Worth Paying a Third Party to Represent Me?
The answer to this question depends upon circumstances unique to each taxpayer. If the amount of taxes that may be saved is higher than the amount you are charged by a representative, the answer is easy: Yes. However, there may be situations where even a huge reduction in the assessed valuation will not affect the amount of taxes to be paid. An honest professional will tell you whether or not it is worth it to pay for their services. Even if the amount of taxes to be saved in a single year may be small, once the taxable value is set, the future increases will come from that reduced figure. This means that a single appeal may result in tax savings for many years to come.
For a free consultation, contact Bruce Redman at 248-594-5959. www.redmanlawfirm.com
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