When to appeal the assessed value of your property
February is the month when townships send out notices to property owners stating the new assessed values and taxable values for their properties. March is the month when the Board of Review meets to review cases where the owner does not feel the assessor valued his or her property correctly. If you feel your property was overvalued on your recent assessment notice (i.e. it is not worth more than twice the assessed value), you may be paying too much in taxes. While commercial property owners can go directly to the Tax Tribunal to dispute their disagreement, it may be worth scheduling an appointment with the local Board of Review first. There are a number of circumstances where the Board of Review will consider lowering your assessed value and it may be financially prudent to talk with them this month if you fit into any of the following situations.
It is important to note that your taxes will only come down if your assessed value is lowered below your current taxable value. The year after a purchase, the taxable value becomes uncapped and is equal to the assessed value, so this is often an important time to review the value. If the purchase price was significantly less than twice the assessed value, you may be over-assessed. The assessor does not look at just one sale, but the average of many sales for similar types of property. If your purchase price was not reflective of the actual value on the open market, the Board of Review will look at other sales that were at market rates. However, if you had an arms-length transaction for a property that was exposed to the open market, the assessed value should be very close to half of the purchase price.
Other factors that may lead to a reduction in the assessed value include neighboring businesses or properties that are undesirable to be located near, proximity of the building to a noisy road, extensive damage or repairs needed to your building or any type of function obsolescence of the building. It may also help if neighboring buildings that are clearly better than yours are selling for less than yours or assessed at less than yours. Similarly, if all of the neighbors have worse buildings than your building, you may be overbuilt for the neighborhood. If you have a recent appraisal or comparable sales that show a significantly lower value than the assessed value, this would be a great indicator that you are over-assessed and will help the Board or Review make its decision. If your property has been for sale on the open market with an asking price of less than twice the assessed value, that would also be an important indicator for the Board.
It is important to check the assessor’s appraisal record card. This may have information on it that is incorrect (such as number of bathrooms, SF, finishes etc.) that lead the assessor to believe the property is worth more than it is. Just a phone call to the assessor may fix this problem and lead to a lower assessed value. It may not seem worth the trouble if the tax savings is not very large, but remember, if you’re paying $500 too much this year, that could mean $520 too much next year and $540 the year after that, depending on the inflation rate. Over the years that you own your property, it adds up quickly and pays to make sure your values are reflective of the true market value.
Dan Stiebel is a member of the Board of Review for the City of Traverse City which meets on March 9 & 10th this year to review properties within the city limits.
-Dan Stiebel, CCIM