Several property owners have contacted me recently to discuss the impact of the COVID-19 pandemic on property values, and the possibility of appealing the assessed value on their properties. The impact of COVID-19 on property values has been immediate, drastic, and indisputable. However, the impact of COVID-19 and those changed property values on Michigan property tax appeals is a bit more nuanced.
2020 Michigan Property Tax Appeals
Tax Day
The primary issue underlying any tax appeal is a challenge to the assessment assigned to your property by the local municipality. The assessed value purports to be 50% of the true cash, or market value of the property on “tax day.” Under Michigan law, tax day was December 31, 2019, for 2020 assessments. Even though your property value may have been substantially impacted by the COVID-19 pandemic, to successfully appeal your 2020 assessment, based on the COVID-19 impact, you would have to demonstrate that the value on December 31, 2019, was lower than twice your assessed value because of the pandemic. Of course, there may be other reasons your property was over-assessed as of tax day that have nothing to do with the pandemic that can and should be considered.
Residential and Agricultural Classified Property
To file a tax appeal on real property that is classified as residential or agricultural, the owner must have appeared before the March 2020 Board of Review. Because the COVID-19 pandemic was just coming into our view at that time, many property owners may not have appeared before the Board of Review. Unfortunately, unless the law is changed (and there are currently no pending bills that would make such a change), that means for Residential and Agricultural classified properties, the owner is unable to file a Petition before the Michigan Tax Tribunal. If the owner did appear before the March Board of Review, the deadline for filing a Petition before the Michigan Tax Tribunal for Residential and Agricultural property is July 31, 2020.
Commercial and Industrial Classified Property
There is no requirement that an owner of property classified as Commercial and Industrial appear before the March Board of Review. Therefore, if an owner believes that the 2020 assessed value is inappropriate, based upon the property’s value on tax day (December 31, 2019), then a Petition before the Michigan Tax Tribunal can be filed in 2020. The deadline for filing such a Petition is May 31, 2020.
2021 Michigan Property Tax Appeals
Tax Day
For 2021 assessments, tax day will be December 31, 2020. Even though your property value may currently be substantially impacted by the COVID-19 pandemic, to successfully appeal your 2021 assessment, you would have to demonstrate that the value on December 31, 2020, is lower than twice your 2021 assessed value. This will depend on what happens to our economy and property values between now and December 31, 2020.
Residential and Agricultural Classified Property
A March 2021 Board of Review appearance is required to file a tax appeal on real property classified as residential or agricultural. If the owner or its representative appears before the March Board of Review, the deadline for filing a Petition before the Michigan Tax Tribunal for Residential and Agricultural property will be July 31, 2021.
Commercial and Industrial Classified Property
An owner of property classified as Commercial and Industrial is not required to appear before the March Board of Review. A 2021 Petition can be filed if an owner believes that the 2021 assessed value is inappropriate. This analysis must be based upon the property’s value on tax day (December 31, 2020). The deadline for filing such a Petition is May 31, 2021.
The impact of COVID-19 on property values has been immediate and drastic. Unfortunately, under Michigan law, that impact may not translate into a reduced assessment for 2020.