May 31 or July 31? Avoiding a Tax Appeal Trap

In Michigan, property taxpayers can challenge the amount of taxes assessed against a property by disputing the assessed value of the property and alleging that the assessed value exceeds fifty percent of the property’s true cash value, which is synonymous with market value. Although the volume of assessment appeals has significantly decreased from the historic high levels of 2009-2011 during the Great Recession, there are still many circumstances where an appeal of a property’s assessment may be advisable. Those circumstances may include, but are not limited to, a recent purchase of the property for a price far below the assessed value or recent construction on the property.

In those circumstances where an appeal is advisable, it is critical to understand the filing deadlines before the Michigan Tax Tribunal (MTT). The MTT has original and exclusive jurisdiction over appeals of a property’s assessment. See MCL 205.731. For property classified as residential or agricultural, an owner must first appear before the local taxing authority’s board of review in March, and then must file an appeal before the MTT on or before July 31. See MCL 205.735a(3) and (6).

On the other hand, owners of commercial or industrial property, have no obligation to first petition the local board of review. However, the deadline for filing an appeal with the MTT for property with these classifications is May 31. See MCL 205.735a(4)(a) and (6).

In both situations, the filing before the MTT is merely the first step in a sometimes-lengthy process that requires particularized knowledge of the rules and customs of practice before the MTT. Property tax appeals are filled with both procedural and substantive traps for the unwary, of which the filing deadline is merely the first.


Underutilized Tax Exemption for Eligible Developer Property

During the depths of the housing crisis, the Michigan Legislature passed Public Act 494 of 2012 to assist home builders holding excess inventories of “development property” (a term defined in the PA 494) in various states of construction. PA 494 was phased in over a one-year period. Beginning December 31, 2013, eligible development property is exempt from taxes levied by the local school district for school operating purposes to the same extent provided a principal residence for either (a) three years, or (b) until the property is no longer eligible development property. See the General Property Tax Act—Act 206 of 1893.

“Eligible development property” is (a) a residential dwelling, condominium unit, or other residential structure that was new construction after December 30, 2012, including (b) the land on which that residential dwelling, condominium unit, or other residential structure is located, if the property meets all of the following conditions: (i) is not occupied and has never been occupied; (ii) is available for sale; (iii) is not leased; and (iv) is not used for any business or commercial purpose. The construction does not need to be complete to qualify for the exemption. See the Department of Treasury Bulletin 24 of 2013 regarding PA 494 of 2012.

To take advantage of the exemption, the owner must fill out Form 5033 and submit it to the local assessor. The assessor must determine if the property is eligible within fourteen days. If at any time the property, or a portion of the property, does not meet the requirements, the owner must file a rescission within 90 days. Assuming a school operating millage of 18 mills, the owner/developer stands to save $1,800 per year per $100,000 of assessed value. Builders and developers, particularly of high value residential construction, should consider utilizing the 211.7ss exemption.