Property Taxes in Michigan Set to Increase

Many Michigan taxpayers have recently received their 2023 property tax assessment notices. Any local assessing unit that has not yet sent its notices, should be doing so soon so that property owners receive them before the March Boards of Review meet. 

At one time all properties had to be appealed to the March Board of Review in order to appeal to the Tax Tribunal. However, as a result of legislation that Honigman spearheaded, properties that assessors have classified as commercial real or industrial real can be appealed directly to the Tribunal. Appeals still can be filed locally for such properties but they are no longer required. In contrast, assessments of properties classified as residential must be protested locally. 

For most taxpayers, the taxable value (on which property taxes are based) will increase 5%. The 5% is this year’s inflation rate and the taxable value increase “cap” per a constitutional amendment known as Proposal A. Since Proposal A’s 1994 enactment, this is the first time that the taxable value inflation rate has been as high as 5%. 

For properties that transferred during 2022, no taxable value cap applies for 2023. Some taxpayers have reported assessors “chasing sales” and dramatically increasing not only the taxable values, but the assessed values as well.

For properties that did not transfer recently, the assessed value may greatly exceed the taxable value. Even though taxes are based on taxable value, a high assessed value may impede an owner’s efforts to refinance or to sell a property.

For Michigan properties that the assessors have classified as commercial real or industrial real, this year’s appeal deadline is May 31, which falls on a Wednesday. The pandemic and remote work continue to impact the Michigan real estate market. Some properties that suffered greatly during 2020 have recovered nicely, while others are now struggling even more than they did during that year. 

There are personal property filing deadlines, in particular for those who have eligible manufacturing personal property (“EMPP”) and those who can now claim the so-called small business personal property exemption. The small business personal property exemption is now available to those whose total personal property market value in a jurisdiction is under $180,000. Every year we hear from taxpayers who lose these exemptions because they did not timely and properly file what is needed. Taxpayers who missed a February filing deadline should file with the March Board of Review as soon as is possible. Honigman property tax professionals can assist with this, or any other property tax issue of concern.