By John Minnis
Legal News
What’s better than an income tax refund? A property tax refund. In fact, we just received a $314.05 refund from my 2010 summer taxes, the first of more refunds to come. We expect to recoup another $1,700 in property taxes, plus interest, going back to 2008.
We have Trey Brice, a partner at Jaffe, Raitt, Heuer & Weiss, and a website he helped create to thank.
Our good fortune began in May 2007 when we bought a home in Grosse Pointe Woods for $219,000. The city’s assessed value of the home at the time was $187,100, meaning the city assessor felt the home was worth $374,200.
The housing market was already in decline. When we first spotted the home, it was on the market for $249,000. Three months later, the price was reduced to $219,000. While the house, occupied by a widow for many years, suffered from much deferred maintenance, we felt the reduced price was a good deal. We offered the asking price, and it was accepted.
Yet we were dismayed when we received our 2008 property assessment. While the assessor had rolled back the assessment from $187,100 to $167,300, it was still far higher than 50 percent of the purchase price of our home. I made an appointment to go before the Board of Review.
I knew enough about challenges to the Board of Review that you could not simply go in with anecdotal evidence and claim your assessment was too high. I did a search of homes sales during the allowable 12-month period and found that not a single home in my neighborhood sold for $300,000 or more. (At a $167,300 assessed valuation, the city felt the true cash value of my home was $334,600.)
Armed with my Bill of Sale and my sales data, I went before the Board of Review and argued that my purchase price did in fact reflect the true market value of my home and requested my assessment be reduced accordingly.
My appeal was rejected. It was almost as if the reviewers had already made up their minds before I even presented my case. I appealed to the Michigan Tax Tribunal, a process that would take two years.
In 2009, with housing prices in freefall, the assessor still thought my home was worth more than $300,000, reducing the assessment to $153,000. We were out of town when the assessment notice came, and I missed the deadline to schedule an appointment before the Board of Review.
Later in 2009, I met Brice at Jaffe. A property tax expert, he had helped create a website designed to help homeowners appeal their assessments. I wrote a story about it for the Legal News. So when the 2010 tax assessment notice arrived, I was prepared.
The city had finally agreed my property was now worth less than $300,000. The 2010 assessment came in at $142,900, meaning the assessor felt I could get $285,800 for the property. If the assessor were correct, I would have sold it in a heartbeat, walking away with a $66,800 profit after living there for three years.
Of course, I knew what everyone else knew but, apparently, the assessor did not: If the home wouldn’t sell for $249,000 in 2007, it certainly wouldn’t sell for $36,800 more three years later during the worst housing bust in decades, perhaps since the Great Depression.
Brice’s website and supporting materials helped me find “comparable sales” and present them in a neat format, with pictures, that the Board of Review expects to see.
Comparable properties must not only be houses from your section of the city; they must also be as similar to yours as possible. In my case, I looked for 2,000-square-foot brick ranches built in the 1950s with attached garages.
I found several comparable sales that sold for about the $219,000 I paid for my house three years ago. I charted three comparables with pictures alongside my home and presented my findings to the Board of Review.
The reviewers were impressed. They verified that my comparables did in fact sell in allotted 12-month period and agreed to lower my assessment to the $110,000 I requested. We figure the reduced assessment would save us about $1,600 in taxes for 2010 alone.
Also about this time, my case came up before a Tax Tribunal referee. However, other than record the date of the hearing in my Google Calendar, I did not read the letter closely until a week or two before the hearing. I found I was required to resubmit my documentation, comparables, etc. by a certain date, and I had missed it.
Brice advised me to go to the hearing anyway. While I would not be allowed to present written materials, I would be allowed to present my case verbally.
I noticed from the city’s materials sent to the Tax Tribunal that the assessor was relying on sales of homes from 2005, two years before I purchased my home. That is how far the assessor had to go back to find comparable sales that would justify her stated $167,300 ($334,600 market value) assessment for 2008, the year being appealed.
I came to the Tax Tribunal hearing armed with more contemporary comparable sales. When I sat down, the assessor was apoplectic. She protested my being allowed to speak. The referee, Sara Moosavi, said she could not deny the petitioner a chance to speak, though she could not accept any written or printed materials from me.
While the assessor was sputtering and protesting, I was as nice and respectful as I could be, just as Brice and his website preparation material suggest. The nicer I was, the more the assessor protested.
My key defense was the assessor’s 18- to 24-month-old comparable sales data. “The 2007 housing market was far different than 2005,” I said. The referee wrote down my comparables from within 12 months of my purchase and questioned the assessor, who scrambled through her sales books to confirm my comparable sales and to find ones that would better serve her cause.
The hearing ended with the assessor again protesting my presence. I smiled and thanked the referee and wished the assessor a good day. It was great.
Even better was the letter from the Tax Tribunal referee a month later agreeing with me that the assessor had relied on outdated sales figures when more contemporary sales were available. While the Proposed Opinion and Judgment did not lower the 2008 and 2009 to reflect my purchase price, they were nevertheless much less than the city was offering.
For 2008, the referee suggested a $148,380 assessment vs. the assessor’s $167,300. The $18,920 reduction saves us about $889, not counting the 1 percent administration fee and 5.81 percent interest.
For 2009, the referee came back with a $136,611 assessment vs. the city’s $153,000. The $16,389 reduction saves us another $803 in taxes, plus 1 percent and 3.31 percent interest.
The 2010 assessment became a little more problematic. Recall that in 2010, we once again went before the Board of Review, and our assessment was reduced to $110,000. However, the Tax Tribunal referee overrode the Board of Review’s reduction and set the assessment at $126,424. While that was still lower than the city’s original $142,900 assessment, I felt I was cheated.
I had 20 days to respond to the referee’s Proposed Opinion and Judgment, which I did. I argued that by the referee overriding the Board of Review’s favorable reduction in 2010, I was “penalized” for having appealed to the Tax Tribunal two years earlier.
The Tribunal judge, Victoria L. Enyart, disagreed. In her Final Opinion and Judgment, she said we should have been reminded that unless requested otherwise, the Tribunal not only determines the assessment value for the year being appealed but for all subsequent years as well.
If the hearing referee comes up with an assessment higher than the Board of Review’s determination, that is not a “punishment” but rather an “unbiased” valuation determined by the referee.
However, in checking the referee’s numbers, the Tribunal judge discovered an error in applying the “percentage decrease” factor to 2010. Rather than the referee’s $126,424 assessment for 2010, the judge said the proper assessment is $98,217—$11,783 less than the Board of Review’s $110,000 reduced assessment! Hence, the $314.05 refund I just received in the mail.
Based on the city’s original $142,900 assessment for 2010, the Tribunal’s $98,217 assessment saves us $2,200 this tax year alone. All told, I figure we saved about $4,000 in property taxes over the three-year period 2008-2010.
The cost for using Brice’s website tool: $99.
The city has 28 days to refund the $1,692 plus 1 percent and interest. Just in time for Christmas!
Have you received your property tax refund yet?
