Property Tax 4 x's others on the block

[KathiKY1]

in Jackson, Michigan

We own a home we're trying to sell, but the property tax is scaring everyone. We pay nearly $10K per year, while homes of equal value on our block pay $2-3K. We want to appeal, but city tells us we have no way. Here's why.

Apparently there was a "Proposal A" passed in Michigan 1994 that allowed longtime homeowners to have their property values only minimally reassessed each year (if at all), while new owners are assessed on actual sales price plus recent improvements (tracked by recent permits). The result is that 90% of the homes have been owned for 15-30 years and are assessed for $50-80K. Property values have significantly increased in the last 5 years due to the schools and commercial growth. Houses rarely sell in this neighborhood because of location, but when they do, they sell for $400-700K. The result is that the houses across the street from us that are bigger and just as beautiful are taxes $2-3K. We bought our house for $319K three years ago, had an electrical fire and rebuilt. The city immediately increased our value by $50K, saying Proposal A doesn't protect documented improvements. To top it off, we were just told that since we moved, we lost our homestead deduction which will now add another $2500 to 2006 tax total! Nobody will look at a house with a yearly property tax of $12,000 on a $375,000 home!

The city tells us we have no appeal basis because longtimers are protected by Proposal A and newcomers have to foot the difference. I asked if I could request a special exemption or appeal based on unequal treatment, but the city says Proposal A justifies it. Is this true?

I went to http://www.crcmich.org/TaxOutline/Property/gpt.html where the Proposal is explained. I would like to know if the following paragraph means (STATE EQUALIZED VALUE x 2 / 1000) x 18 = MAXIMUM TAX ALLOWED

"Varies by local unit, but certain statewide constitutional and statutory restrictions exist. The rate may not exceed 15 mills ($15 per $1,000) or 18 mills in counties with separate, voter-fixed allocations for all jurisdictions. (These limitations were reduced by the number of mills allocated to local school districts in 1993, after which local school districts may not receive allocated millage.) "

DESC MILLAGE AMOUNT
City op 6.71920 1039.87
Public Improv 1.91970 297.09
Police/Fire Pen 4.12000 637.61
City Hall Debt .75000 116.07
JCC Operat 1.15110 178.14
ISD Operat 0.17190 26.60
ISD Voc Ed 1.07560 166.46
ISD Spec Ed 2.81920 436.30
JP Operat 17.88200 exempt if pri**** residence
JP Debt JHS 1.60000 247.61
JP Debt IMP 0.80000 123.80
JP Oper Pubrec 0.20000 30.96
Set 6.00000 928.57
County Operat 1.71570 265.52
Admin Fee 24.03

 

[divgradcurl]

Did you buy your property after 1994 (after Proposition A)?

Just FYI, we've been putting up with this type of stuff in California since 1978...

 

[KathiKY1]

At close, existing assessment was $143K, but capped value was in place at $103K.
We bought the property for $319K Aug 2002. City immediately changed taxable to meet assessment of $143K from that point on.
Dec 2002, we were reassessed to $149K as new owners.
Jul 2003, we had a fire. City adjusted assessment to $143K for 2004 taxes.
Jul 2004, we moved back into the house. City reassessed to $172K.
Dec 2004, assessment remains $172 with homestead deduction being removed, adding 17 more mills to the taxes.

Proposal A says total mills can't exceed 15, but I don't know what that means. If you add up the millage on my taxes, it adds up to 47 mills. Is that the same thing?

 

[justalayman]

You need to re-read the link you posted.
Average millage in 2004 was 40 mills
Actually you are getting off cheap. When you bought the house for319k you established the value so the could tax you at 159k originally (319k/2)
They are then allowed to raise your assessment 5% or the rate of inflation pewr year, whichever is less. You can do the figures here. when you moved and this home (in Michigan) is no longer your pri**** residence you lost the homestead exemption which equals BIG tax increase. If the neighbors sell their homes here the new assessment would be more like your current one. Since the assessment can only be raised 5% or inflation if home prices outpace this figure taxes are artificially depressed.

 

[dallas702]

Typical government milking machine shenanigans! You may be trapped with this one, but I can tell you that many states are being sued with the claim that it is unconstitutional to levy unequal taxes upon people for the same assets/resources. You need to find a local attorney who has succesfully challenged these arrangements. It's one big reason I live where we (legally) beat the hell out of legislators, commissioners, and tax assessors who try this crap.

But, they still find ways to spend our tax $$$ like drunken sailors in Bangkok.

 

[KathiKY1]

what is STATE EQUALIZED VALUE?

justalayman,

the reason the city didn't go to $159 the first year is that it would have exceeded the STATE EQUALIZED VALUE. Not sure what that is, but the city bumped our TAXABLE VALUE to that number whereas the previous owner's TAXABLE VALUE was about 66% of the STATE EQUALIZED VALUE.

Can anyone explain what this STATE EQUALIZED VALUE is and why it's so much higher than the TAXABLE VALUE of my neighbors?

 

[KathiKY1]

I did some more research to find out how the various values are calculated and found the site http://www.ci.ann-arbor.mi.us/FinancialAdminServices/Assessor's/sev.html. I still can't sort this out. The explanation sounds like there should be some limits to yearly increases, yet my property has been increased in every value every year.
I had a house fire that ruined the whole house and I got $7K knocked off the taxable for a year?

Can anyone explain this?

2002 * 2003 2004 ** 2005 ***
TAXABLE 102,539 149,100 142,094 154,762
ASSESSED 143,250 149,100 143,150 172,100
EQUALIZED 143,250 149,100 143,150 172,100

* Sale of Property Aug 2002 ($319,000)
** House Fire, uninhabitable Aug 2003 – June 2004
*** House rebuilt by insurance ($328,000, included teardown)

 

[Shay-Pari'e]

in Jackson, Michigan

We own a home we're trying to sell, but the property tax is scaring everyone. We pay nearly $10K per year, while homes of equal value on our block pay $2-3K. We want to appeal, but city tells us we have no way.

Here's why. The rest of your post makes no difference. If you are selling your home, it will be apraised. That appraisal is what the county taxes you on.

Your neighbors may have never tried to refinance, therefor he is still paying taxes on his original loan agreement.




Apparently there was a "Proposal A" passed in Michigan 1994 that allowed longtime homeowners to have their property values only minimally reassessed each year (if at all), while new owners are assessed on actual sales price plus recent improvements (tracked by recent permits). The result is that 90% of the homes have been owned for 15-30 years and are assessed for $50-80K. Property values have significantly increased in the last 5 years due to the schools and commercial growth. Houses rarely sell in this neighborhood because of location, but when they do, they sell for $400-700K. The result is that the houses across the street from us that are bigger and just as beautiful are taxes $2-3K. We bought our house for $319K three years ago, had an electrical fire and rebuilt. The city immediately increased our value by $50K, saying Proposal A doesn't protect documented improvements. To top it off, we were just told that since we moved, we lost our homestead deduction which will now add another $2500 to 2006 tax total! Nobody will look at a house with a yearly property tax of $12,000 on a $375,000 home!

The city tells us we have no appeal basis because longtimers are protected by Proposal A and newcomers have to foot the difference. I asked if I could request a special exemption or appeal based on unequal treatment, but the city says Proposal A justifies it. Is this true?

I went to http://www.crcmich.org/TaxOutline/Property/gpt.html where the Proposal is explained. I would like to know if the following paragraph means (STATE EQUALIZED VALUE x 2 / 1000) x 18 = MAXIMUM TAX ALLOWED

"Varies by local unit, but certain statewide constitutional and statutory restrictions exist. The rate may not exceed 15 mills ($15 per $1,000) or 18 mills in counties with separate, voter-fixed allocations for all jurisdictions. (These limitations were reduced by the number of mills allocated to local school districts in 1993, after which local school districts may not receive allocated millage.) "

DESC MILLAGE AMOUNT
City op 6.71920 1039.87
Public Improv 1.91970 297.09
Police/Fire Pen 4.12000 637.61
City Hall Debt .75000 116.07
JCC Operat 1.15110 178.14
ISD Operat 0.17190 26.60
ISD Voc Ed 1.07560 166.46
ISD Spec Ed 2.81920 436.30
JP Operat 17.88200 exempt if pri**** residence
JP Debt JHS 1.60000 247.61
JP Debt IMP 0.80000 123.80
JP Oper Pubrec 0.20000 30.96
Set 6.00000 928.57
County Operat 1.71570 265.52
Admin Fee 24.03[/QUOTE]

 

[KathiKY1]

We never refinanced either. After reading everything I can find, it appears that the city is not supposed to be able to increase the TAXABLE VALUE by more than the lesser of the two (5% or the rate of inflation), yet our property has been reassessed a minimum of 7K every time.

I understand they probably have me over a barrell on the increase after the purchase (change of ownership) and also after the fire (the limited increase doesn't apply with improvements, correct), but weren't they in the wrong with the increases in between?

 

[abezon]

Your argument would be that the remodel after fire damage was repairs to bring the house back to its original condition. Whether you could prove that at an administrative hearing depends on what you did & whether you can prove the before & after conditions.

As for the limits on increasing assessed value, go to city hall with a calculator & ask the clerks to double check the math. Good luck.

 

[justalayman]

We never refinanced either. After reading everything I can find, it appears that the city is not supposed to be able to increase the TAXABLE VALUE by more than the lesser of the two (5% or the rate of inflation), yet our property has been reassessed a minimum of 7K every time.

I understand they probably have me over a barrell on the increase after the purchase (change of ownership) and also after the fire (the limited increase doesn't apply with improvements, correct), but weren't they in the wrong with the increases in between?

Get a calculator...figure out if they have raised your taxable by more than 5%. (They didn't) Ask the local treasurer if the increase was based on this or the rate of inflation. If inflation find out what the figure they used was. They are allowed to raise your taxes the lower of the 2. Did they? If they raised it more you need to file an appeal. (They will even tell you who to appeal to).

As far as the taxes concerning you house fire, not sure there but you probably should have talked with the assessor or local treasurer when you had the fire. It should have brought the house to a very low value based on the cost of rebuild.

Concerning the last post...a house is not like a car...you generally don't bring it back to original condition unless you put old stuff in there. It is an inevitability that you have actually improved your home and increased its' value. Not sure how this is accounted for in property taxes though. I would think it would be considerd a remodel and change the taxable value.
Did you state that it cost you 328k to rebuild the home? Sounds like it was a total. If this is the case the assessor was starting anew. Actually having to consider this to be a new house. If you think you are over-appraised you will need to get an appraisal (real one, not a real estate agents market appraisal ) to appeal the assessment.
When you left Michigan you lost the "homestead exemption". That is why your taxes increased (or will this tax year). If the new purchaser uses it a pri**** residence, then they will be able to claim "homestead exemption" and pay taxes closer to what you had been prior to you leaving Mi. Their taxes will be based on the sale price of the house (just like yours was) and taxes will figure accordingly.

 

[KathiKY1]

Thanks for the explanation justalayman. I follow you. After talking more with the city, I don't think I can argue the 5% max because they claim the property changed ownership the first year, we added a shed (although we actually just replaced the existing one with a better roof) the second year, and rebuilt after a fire the third year. In that respect, they probably have justified their reassessment. HOWEVER, My argument is that my taxes are so unequal to everyone elses'. I understand some difference because I bought recently, but my property is not worth 5 times my neighbors and my assessment is literally one out of 10-15 houses. My neighbors' assessed values are near 75-100K. Mine is 370+K. I wrote a letter to the state treasurer and got an interesting reply:

Proposal A did not affect the assessed value. All properties of like kind should be assessed in a similar manner. If some $400,000 properties are assessed at $100,000 and newly acquired or built properties of $400,000 value are assessed at $200,000 the uniformity required by the Michigan Constitution is not present and you do have the right to appeal to the March Board of Review and then to the Michigan Tax Tribunal. Complaints regarding improper assessing practices can be sent in writing with documentation to the State Tax Commission and the State Assessor's Board.

I also asked about the 15 mil cap and this was the reply:

General Law townships are limited to 15 mills or 18 mills except for certain debt and voted millage. Most townships combined millages exceed the constitutional limit because addition millages were legally voted by the residents of the local units. Charter townships and cities millage rates are governed by their charters. Those charters were voted into existence by the residents. A mill is $1/$1,000. Thus if you have a $200,000 taxable value and 50 mills you calculate the tax by multiplying 200,000 by 0.050 or $10,000.

If I'm reading the reply correctly, they are in agreement with me that the property assessments have to be somewhat in line with each other. Or am I just reading into it?

 

[justalayman]

Don't confuse assessment with taxable value. The people in the area that have owned for a considerable time will have a lower taxable value for the same assessed value due to the caps that limit the increases to 5% or inflation. You should be able to access the tax records for any property and see what the assessed value is for a house that is similar to yours. If this is extremely different then there is probably a problem.

 

[KathiKY1]

I have personally seen some of their bills and the city confirmed that the house across the street from me is assessed at $79K.

 

[justalayman]

It sounds as if something is amiss. A similar home in the same area should have a similar assessment. It is only their taxable value that would be different because of their tenure in the area. If there is a large discrepancy in the assessments then you should speak with the assessor (specifically) and inform him of the discrepancy. It sounds as if you may be over-assessed or the neighbors may be under-assessed. I don't see how you can be over-assessed because they can use the recent sale of the home for a true market value so I would tend to believe the other homes are under-assessed. If this is the case it would have no effect for you positive or negative. For this to happen the assessor may not have acurately adjusted the neighbors assessments but this really has no effect on anyone involved because their tax increases a capped and yours is correct.
So after is all said and done you have the same problem but anyone who is shopping for a home in the same tax district will have your higher tax bill for the same value home whether it is your home or some other $370k home so basically the taxes or more appropriately the differences in taxes between you and your neighbors home is actually irrelevent.