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Brad, Retired IRS Agent
Category: Tax
Satisfied Customers: 177
Experience:  Retired; 32 years service and expertise in Individual, Partnership, Trust, Corporate Tax Law;Mensa
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If our Property taxes are structured under Proposal A in ...

Resolved Question:

If our Property taxes are structured under Proposal A in the STate of Michigan --- Our house we paid $43,000 burnt down(built in 1883). We rebuilt on the existing property the same size foundation/home - but are now taxed at Taxable Value of $123,000 --Ownership has not changed hands -- Is there a tax loop hole that allows them to tax us like this?
Submitted: 8 years ago.
Category: Tax
Expert:  Brad replied 8 years ago.


Having dug deeply into the Michigan Treasury website, I see no provision that would leave the residence taxable value as it was before the old residence burned. There are exemptions for those in the poverty income level, but my review of all the government forms for real property disclosed no exclusion due to disasters such as a fire. I did read Proposal A as you can below. With a newly build structure valued at $123,000, there is no provision that would allow it to be given a taxable value of $43,000. There is no mention of hardship exclusions for fire or disaster....only for the poverty exemption.

The land valuation is protected under Proposal A and you should make sure that the land value was not reassessed, but not the new construction as you can see from the direct quotation below:

"Beginning in CY 1995, Michigan property taxes are levied on taxable value. A constitutional amendment requires that the taxable value of a residence or business cannot increase in any one year by more than 5 percent or the rate of inflation, whichever is less (excluding the value of new construction). " Notice by Owner of Property Incorrectly Reported or Omitted From Assessment Roll,1607,7-238-43535_43539---,00.html Principal Residence Exemption Program Homeowner's Principal Residence Exemption Affidavit


I hope you review the above website when you have the opportunity. The information is enlightening, but offers no relief for you on the taxable valuation.


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