December 16, 2007
BY MARGARITA BAUZA
FREE PRESS BUSINESS WRITER
Ryan Vinco bought his house in December 2004 for $300,000. This past February, he received a tax statement based on the city of Riverview's assessment of his house's new worth, $412,000.
His taxes increased from $6,000 in 2004 to nearly $8,000 in 2007.
In May, he filed an appeal with the city of Riverview. The appeal was denied.
"There's just no way my taxes should be that high," said Vinco, 29, whose house is appraised for $290,000, three years after buying it.
Vinco is waiting for a date with the Michigan Tax Tribunal to contest Riverview's denial of his appeal.
Riverview assessor Denise Kuch agrees that Vinco experienced a considerable jump in the assessed value of his home. His assessed value was $171,500 in 2005 and $206,000 in 2007, Kuch said. Homeowners are typically taxed on half the cash value of their home.
Communities all around Michigan say they are experiencing more residents appealing the assessed value of their homes.
Appeals in Riverview increased from four or five annually to 14 this year, said Kuch, adding: "I think we'll see an increase in 2008."
'Through the roof'
Tax appeals at the Michigan Tax Tribunal, which hears homeowners' denied petitions from local municipalities, have increased every year since 2003 when real estate property values began to slide in Michigan.
In fiscal year 2007, the state handled about 5,152 appeals to property taxes around the state. That's up from 4,066 in 2004.
Because the state tax tribunals handles unsuccessful tax appeals that occur at the local level, state numbers don't paint the whole picture of what's going on in communities.
"The number of appeals have gone through the roof," said Ferndale City Manager Robert Bruner. Appeals there numbered 388 in 2005 and 420 in 2007.
Bruner said the city is accustomed to handling corporate tax appeals but it wasn't until this year that homeowners began to increasingly appeal their taxes, too.
"There are law firms out there that will basically appeal commercial taxes on contingency. If they succeed, they get paid," Bruner said. "What's new is the number of residential appeals. It's followed the real estate market. The lower the real estate market goes, the more people come in for tax appeals."
Bruner said he's satisfied with the assessed value of his Ferndale home, which he bought in 2002, from someone who had owned the house for 70 years. When he bought the house then, his taxes tripled. However, he and his wife recently appealed taxes on a home she bought in Ypsilanti shortly before the two met. That house has been on the market for nine months and he said the taxes on it are too high. He is waiting to hear whether his appeal was successful.
Standard procedure
The board of review process is the same in all communities statewide. Homeowners usually get their notices of assessed valuations in early February.
If they choose to appeal their taxes, they are required to fill out a state form and appeal in their communities in early to mid-March.
More real estate businesses are starting to sell an appeals service to homeowners, which surprises Bruner because he doesn't see the process as "very onerous."
Vinco, the Riverview resident, sought the help of Jumana Judeh, owner of a Dearborn real estate firm, when he got his tax bill last February.
Judeh said her business load has shifted significantly from appraising properties for lending purposes to appraising for tax appeals.
Judeh said it's the first time since she's been in business that residential assessments have been lower than taxable values and that makes homeowners nervous. The disconnect has led her tax-appeal business to increase about 30% this year, she said.
"The norm now is that we appraise lower than what the city thinks it's worth," she said.
Runner of Ferndale said that tax revenues in the city haven't yet declined as the result of the rise in tax appeals.
Ferndale revenue has not yet decreased because of the cushion between the aggregate assessed and taxable values, said city assessor Jay Singh. In other words, the assessed value of homes for lending purposes is, in most cases, still higher than taxable value.
Although the assessed values eventually may decrease to reflect the decline in market values of properties, the taxable value could still go up by the rate of inflation, he said.
More appeals, more work
Singh said the added appeals have added work.
"Yes, more appeals require more hearing time, more board member time, more clerical time for processing paper and record keeping," he said. "But that is our responsibility to give the opportunity to every taxpayer who thinks that his assessed value should be lower."
David Nykanen, who is also handling more tax appeal business at his Southfield law firm Steinhardt Pesick & Cohen Professional Corp., says property owners shouldn't kid themselves into thinking that a tax appeal is a slam dunk.
"You're not going to get any tax savings unless you believe your property is worth less than twice the taxable value," he said.
"The number of calls we're getting is really growing," said Nykanen. "They usually start after people get their assessment reports. But now they're even calling before they get them. I think that's a sign that appeals are going to go up."
BY MARGARITA BAUZA
FREE PRESS BUSINESS WRITER
Ryan Vinco bought his house in December 2004 for $300,000. This past February, he received a tax statement based on the city of Riverview's assessment of his house's new worth, $412,000.
His taxes increased from $6,000 in 2004 to nearly $8,000 in 2007.
In May, he filed an appeal with the city of Riverview. The appeal was denied.
"There's just no way my taxes should be that high," said Vinco, 29, whose house is appraised for $290,000, three years after buying it.
Vinco is waiting for a date with the Michigan Tax Tribunal to contest Riverview's denial of his appeal.
Riverview assessor Denise Kuch agrees that Vinco experienced a considerable jump in the assessed value of his home. His assessed value was $171,500 in 2005 and $206,000 in 2007, Kuch said. Homeowners are typically taxed on half the cash value of their home.
Communities all around Michigan say they are experiencing more residents appealing the assessed value of their homes.
Appeals in Riverview increased from four or five annually to 14 this year, said Kuch, adding: "I think we'll see an increase in 2008."
'Through the roof'
Tax appeals at the Michigan Tax Tribunal, which hears homeowners' denied petitions from local municipalities, have increased every year since 2003 when real estate property values began to slide in Michigan.
In fiscal year 2007, the state handled about 5,152 appeals to property taxes around the state. That's up from 4,066 in 2004.
Because the state tax tribunals handles unsuccessful tax appeals that occur at the local level, state numbers don't paint the whole picture of what's going on in communities.
"The number of appeals have gone through the roof," said Ferndale City Manager Robert Bruner. Appeals there numbered 388 in 2005 and 420 in 2007.
Bruner said the city is accustomed to handling corporate tax appeals but it wasn't until this year that homeowners began to increasingly appeal their taxes, too.
"There are law firms out there that will basically appeal commercial taxes on contingency. If they succeed, they get paid," Bruner said. "What's new is the number of residential appeals. It's followed the real estate market. The lower the real estate market goes, the more people come in for tax appeals."
Bruner said he's satisfied with the assessed value of his Ferndale home, which he bought in 2002, from someone who had owned the house for 70 years. When he bought the house then, his taxes tripled. However, he and his wife recently appealed taxes on a home she bought in Ypsilanti shortly before the two met. That house has been on the market for nine months and he said the taxes on it are too high. He is waiting to hear whether his appeal was successful.
Standard procedure
The board of review process is the same in all communities statewide. Homeowners usually get their notices of assessed valuations in early February.
If they choose to appeal their taxes, they are required to fill out a state form and appeal in their communities in early to mid-March.
More real estate businesses are starting to sell an appeals service to homeowners, which surprises Bruner because he doesn't see the process as "very onerous."
Vinco, the Riverview resident, sought the help of Jumana Judeh, owner of a Dearborn real estate firm, when he got his tax bill last February.
Judeh said her business load has shifted significantly from appraising properties for lending purposes to appraising for tax appeals.
Judeh said it's the first time since she's been in business that residential assessments have been lower than taxable values and that makes homeowners nervous. The disconnect has led her tax-appeal business to increase about 30% this year, she said.
"The norm now is that we appraise lower than what the city thinks it's worth," she said.
Runner of Ferndale said that tax revenues in the city haven't yet declined as the result of the rise in tax appeals.
Ferndale revenue has not yet decreased because of the cushion between the aggregate assessed and taxable values, said city assessor Jay Singh. In other words, the assessed value of homes for lending purposes is, in most cases, still higher than taxable value.
Although the assessed values eventually may decrease to reflect the decline in market values of properties, the taxable value could still go up by the rate of inflation, he said.
More appeals, more work
Singh said the added appeals have added work.
"Yes, more appeals require more hearing time, more board member time, more clerical time for processing paper and record keeping," he said. "But that is our responsibility to give the opportunity to every taxpayer who thinks that his assessed value should be lower."
David Nykanen, who is also handling more tax appeal business at his Southfield law firm Steinhardt Pesick & Cohen Professional Corp., says property owners shouldn't kid themselves into thinking that a tax appeal is a slam dunk.
"You're not going to get any tax savings unless you believe your property is worth less than twice the taxable value," he said.
"The number of calls we're getting is really growing," said Nykanen. "They usually start after people get their assessment reports. But now they're even calling before they get them. I think that's a sign that appeals are going to go up."
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