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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10103
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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We are looking to purchase property in Michigan. This is a

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We are looking to purchase property in Michigan. This is a bankruptcy sale. If the deal goes through we will be paying a lot less than the taxable value. (Will the tax assessor have to reassess the property at the lower value of the property?) All the examples on the internet assume the price has gone up and is now worth the SEV of the State. This property has lost value in the downturn of the economy.

NPVAdvisor :

Hi, the tax assessor for the county will reassess periodically and should use the true fair market value ... and one of the first things they'll look at is your buy price and the sale prices of like-kind property in the area

NPVAdvisor :

THe sale itself, however, won't case a reassessment in of itself

NPVAdvisor :

CAn you tell me what county you're in?

NPVAdvisor :

.

NPVAdvisor :
still don't see you coming into the chat, so after I give you general information, I'll switch to the question and answer mode. ... Maybe that will help (You can still ask clarifying questions there, we just can't chat in real time as we can here)
NPVAdvisor :

First, after doing some research, it appears that there are a couple of things to be aware of

NPVAdvisor :

(1) a sale can have the effect of "uncapping" of the tax value: see this: http://www.michigan.gov/taxes/0,1607,7-238-43535_57482---,00.html

NPVAdvisor :

(2) It appears that lots of folks have to do an appeal to get the value reduced to true market value

NPVAdvisor :

Over-assessment: Market conditions preclude resale for at least two times the assessor’s determination of “taxable value” and/or property improvements have been overvalued

NPVAdvisor :

Transfers of title (through acquisition or internal reorganization) are treated as taxable transfers and/or “uncapping” events

NPVAdvisor :

and

NPVAdvisor :

or income producing property, income and expenses have changed (i.e., occupancy rates have declined and costs have increased

NPVAdvisor :

are given as reasons that you should look to the appeals process

NPVAdvisor :

Found an excellent website that gives you the basic timeline for the appeals process:

NPVAdvisor :

To better understand the appeals process, it is important to be aware of the timeline that begins with the initial assessment and continues with established and rigid deadlines for pursuing an appeal. It is important to contact the local assessor’s office to get information regarding deadlines and steps to preserve appeal rights because procedures often vary by jurisdiction.
December 31, 2009
The 2010 property tax assessment is based upon the value of the property as of December 31, 2009, or what is commonly referred to as “tax day.”
January to Early March
“Notices of Assessment” are issued to property owners during this time period, and depending on the municipality and property classification, taxpayers must often act before strict deadlines with little or no actual notice. The Notice of Assessment might warrant a valuation appeal if the market value (or “true cash value”) of the property is less than twice the stated Taxable Value. Additionally, the Notice of Assessment could raise issues regarding: classification, transfer of ownership (transfer tax liability and/or uncapping), principal residence exemption, and valuation of improvements. There are varied appeal procedures for each of these issues.
Some municipalities, including the cities of Detroit, Grand Rapids and Wyoming, require an assessor’s review or similar pre-appeal review process regarding residential and agricultural property. Those reviews occur in early to mid February and are a prerequisite to the right to appeal to the Board of Review and later, to the Michigan Tax Tribunal. In Detroit, for example, this review must be requested in person in the Board of Assessor’s office before February 12, 2010.

NPVAdvisor :

a little dated, but the timelines I think are probably the same, as far as the times of the year that these things happen

NPVAdvisor :

.

NPVAdvisor :

March
Each municipality holds Board of Review hearings in March, commonly from the second Monday in March unless a different day has been established by ordinance. Some municipalities allow written protests in lieu of a Board of Review appearance. Depending on the property classification and the type of appeal taken, the Board of Review must make its determination and give notice to the property owner typically no later than the first Monday in June following the Board of Review hearing.
May 31 and July 31
General deadlines for appeals to the Michigan Tax Tribunal. The applicable deadline depends on the property classification and type of appeal.

NPVAdvisor :

.

NPVAdvisor :

During tax appeal season it is common for property owners to approach real estate professionals requesting an “appraisal” of their property. Real estate licensees often charge a fee for this service. In Michigan, however, the law restricts the services that a licensee may render and under what circumstances:
A real estate salesperson may provide a market analysis solely for the purpose of assisting a customer or potential customer in
determining the potential sale, purchase, or listing price of real property or the rental rate of real property. The salesperson MAY NOT charge a fee or require any other valuable consideration in exchange for that analysis.
A real estate broker or associate broker may provide a market analysis for a fee if it does not involve a federally related transaction. The market analysis must be put in writing and it must state in boldface print “This is a market analysis, not an appraisal and was prepared by a licensed real estate broker or associate broker, not a licensed appraiser.”

NPVAdvisor :

.

NPVAdvisor :

And finally,

NPVAdvisor :

.

NPVAdvisor :

In light of the statutory requirements, and short of a formal appraisal by a licensed appraiser, real estate brokers and associate brokers are in the most appropriate position to offer guidance to clients regarding the value of their property for tax appeal purposes. Failure to comply with the above requirements subjects the licensee to statutory penalties and creates the risk that the analysis would be rejected and an appeal denied. Real estate licensees should also be cautioned that “representing” a client at a board of review proceeding could be construed as the unauthorized practice of law. Therefore, your clients should consult with legal counsel during the process to help determine the best course.

NPVAdvisor :

.

NPVAdvisor :

Here's the website for the folks you'll do the appeal with... everything you need is there (forms, process, etc)

NPVAdvisor :

from the site:

NPVAdvisor :

The Michigan Tax Tribunal is an administrative tax court. As the State's tax court, the Tribunal has authority over assessment disputes relating to both property and non-property tax matters. To resolve those disputes, the Tribunal conducts hearings and renders written decisions based on the evidence submitted by all parties.

Property tax appeals filed with the Tribunal involve properties as small as the house on the corner and as large as the Dow Chemical Company in Midland, Michigan.

State non-property tax appeals filed with the Tribunal involve all taxes levied by the Michigan Department of Treasury including individual income taxes; sales, use and withholding taxes; single business taxes; corporate officer liability issues; motor fuel refund issues, etc. The Tribunal shares its authority over non-property tax matters with the Court of Claims.

NPVAdvisor :

and here's the site:

NPVAdvisor :

Hope this helps

NPVAdvisor :

Lane

NPVAdvisor :

Still haven't see you come in ... but spend a little time with all of this (and you are welcome to bookmark to come back for reference)

NPVAdvisor :

I'll switch to Q&A now, but again, you can still ask questions there

NPVAdvisor :


If this HAS given you enough information, I would appreciate either an “accept” or a feedback rating of 3 (OK) or better. That's the only way they will pay us here. HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.


Lane and other Tax Specialists are ready to help you

Thanks so much for the rating and bonus!



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Thanks again,

Lane




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