I've received two calls about this issue within the past 48 hours. A number of West Michigan homeowners are getting a nasty little surprise in the mail. They have been informed that the Taxable Value of their home has increased. Many are very perplexed and stunned. As real estate prices have plummeted, they are left asking themselves, "Why have my taxes increased on a depreciating asset?"
Well, the answer is definitely illusive and non-existent if you are seeking an explanation based on common logic. The key to understanding WHY your taxes have increased while your neighbors' homes have sold for less within the past couple of years is hidden in a change that was made to the states' constitution in 1994.
This change in the constitution limited the amount that your taxes could increase to a fixed rate every year. Now, while real estate prices continued to increase on a yearly basis, most folks figured that the tax man was due his increase as well.
But there was NO provision in the amendment for a scenario in which real estate prices would fall dramatically. Thus the situation we have today in which many people are incensed by the fact that they are being assessed more for homes which have fallen in marketable value.
Homeowners always have the right to challenge their assessments. If you choose to do so, you should be armed with recent comparable properties and a detailed explanation about you they think the current assessment for your property was done improperly and your taxable value inflated.
Unfortunately, for many, the conclusion they are seeking may not be granted. Here's why. Taxable Values can increase at the legal limit UNTIL they equal the assessed Value. If you have a difference between these two numbers, you may face an uphill battle in getting your assessment reduced.
It may also be advantageous to seek the assistance of other professionals in related real estate industries and/or legal counsel. In addition, here's a link to a recent news piece on this situation. Finally, here are some suggestions to assist with your preparation.
- Make an appointment, in some areas, you will need to be placed on the meeting agenda
- Consult with a local appraiser, talk with a real estate broker about their general experience in the current market. Be as informed as possible.
- Research online. There are sites like Trulia & Zillow which may be useful in getting Sold data if this is not available through the local public side of the Multiple Listing Service.
- Document your research and be prepared to make a calm, reasoned argument in stating your case.
Lastly, keep things in perspective. Remember that when times were good...taxes were not allowed to rise to reflect the increases we enjoyed in market value due to this same law. So, while I don't like it...well, sometimes I guess you take the good with a little of the not so pleasant current reality.
Copyright 2008 Audu Real Estate All Rights Reserved
Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511.
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I've received half a dozen calls from past clients in just the last few weeks, requesting that I help them put together an argument to present before the Board of Review in our township.
This situation is a collision between reality and need. State and local governments have become more impoverished, with the loss of Federal revenue sharing dollars. School districts and local governments are really squeezed these days. Property tax authorities can lower assessed values, but they'd just have to raise the mill rate in order to compensate, or deal with big declines in revenues. From local government's perspective, the money has to come from somewhere, or the public has to face the loss of schools, fire & police services and road projects.