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Property tax assessment appeals time

Property tax assessment appeals time

If you own property in Grand Rapids, you’ve probably received a notice that looks like this in the mail recently:

You may be tempted to read “This is not a tax bill” and then throw it away, thinking that it is not important. However, this could be very important. It is not a tax bill, but it tells you what your tax bill is based on. Property taxes are based upon two things: the millage rate and the taxable value. Multiply the millage rate times the taxable value, divide by 1,000 and this gives you what you owe in taxes for the year.

The millage rate is based on what voters have approved by county, township or city, and school district. Each area has two different rates, the homestead and the non-homestead. This means that if you live there as your primary residence or you don’t. You can only have one primary residence, so your cottage or rental property would not get this exemption. Is this important? Very much so. Having the homestead exemption saves you 18 mills or about $900 per year for a home worth $100,000.

Look at this assessment form, especially if you’ve purchased the property this past year. If this is your principal residence then the percentage should be 100%. The example attached is for my rental property, which is 0%. This is located toward the bottom of the page.

The other thing that your taxes are based upon is the taxable value of the property. The assessor determines, based on your square footage and other factors, what he thinks your home is worth. Half of the fair market value is what your assessed value is (a $100,000 house has an assessed value of $50,000). Your taxable value can increase no more than the rate as inflation, but will never exceed your assessed value. So in a market where property values are increasing, you’ll see the taxable value gradually be less and less than the assessed value. As you can see, in my case, these numbers are the same:

This is when appealing your assessed value really makes sense. In my case the assessor is saying to me “I think your property is worth $91,400” (double $45,700). Based on what I have seen of the neighborhood sales, I only think that the property is worth $70,000 which would be an assessed value of $35,000. The non-homestead rate for the city of Grand Rapids is 47.7817 so my property being over-assessed by $10,000 is going to cost me about $475 a year, or around $40 per month. If I am successful in my appeal then not only am I going to save $475 for 2011, I will also save it every year after that because even when property values do start going up, they can only go up by the rate of inflation so the lower value will become my new baseline.

So, when you get this notice in the mail, make sure that you have the correct percentage of homestead exemption and see if you agree with the assessed value. This could save you thousands of dollars!! Pay attention – the city of Grand Rapids assessment appeals form is due by February 18. If you miss the deadline you’re stuck with this value until next year.