An estimated 60 percent of U.S. homes are overvalued for tax purposes, according to the National Taxpayers Union. Because property taxes are based primarily on the value of a home, it follows that most homeowners end up paying more than they should on their property taxes.
Surprisingly, the NTU estimates that only 2 percent of homeowners appeal their property taxes — but a majority of those who do appeal win at least a partial victory, ABC News reported.
A number of factors go into assessing the value of a home for tax purposes, including:
- Home size
- Lot size
- Quality and type of construction
- Age of the building
- Sales prices of nearby homes
- Existence of certain features such as a finished basement or attic
Common home assessment errors
Particularly with older homes, assessment errors may occur as a result of inaccurate, outdated or incomplete property tax records. Without access to the inside of a home, a tax assessor may draw inaccurate conclusions about the interior, for instance by counting a half-bath as a full bathroom or assuming that the attic is finished when it fact it is not.
Other errors may occur when an assessment does not accurately reflect the deterioration of a home’s amenities over time, such as when a tax assessor includes the value of a finished basement without regard for the fact that they basement has flooded and is in need of extensive repairs. Errors can also occur when homeowners obtained permits for renovations that have not yet been completed, since the tax assessor may erroneously factor the proposed renovation into the value of the home.
While some tax assessment errors are the result of inaccuracies about physical attributes of a home, others reflect a miscalculation of the home’s overall market value. Particularly in and around the Detroit area, where the real estate market has been hit hard by the economic downturn, Michigan homeowners often find that their homes are assessed at a value far higher than what they could realistically be sold for in the current market.
Take action quickly to preserve the right to an appeal
Michigan homeowners who believe they have been asked to pay too much for their property taxes can file an appeal with the Board of Review, and, if necessary, with the Michigan Tax Tribunal. However, it is important take action quickly because the deadline for filing an appeal is typically very short — often as little as little as 10 days after receiving the notice of assessment. In addition, several cities in the Detroit area require homeowners to submit an administrative appeal prior to making an appeal to the Board of Review.
Because the property tax appeal process can be quite long and complicated, many Michigan homeowners choose to work with an experienced property tax lawyer when filing an appeal. A knowledgeable property tax attorney can advise homeowners of their options and help them decide whether or not to pursue an appeal. If the homeowner decides to go forward with an appeal, an attorney can be a valuable guide and advocate throughout the process. Many lawyers who focus on property tax appeals charge on a contingency basis, which means that they charge a fee only if the case is successful.