What to do if your taxes are too high?


You cannot appeal an assessment simply because you cannot afford to pay the tax levy. Property taxes are based upon a property’s value – not the owner’s income. An inability to afford paying taxes is cured through tax breaks and exemptions. With one exception, the poverty exemption, high taxes are never appealable to a Board of Review- only the value of property estimated by the assessor is appealable!

When your taxes are too high for you to afford, you should first look to Michigan’s “Circuit Breaker” law for help. This is the form 1040CR filed with your state income taxes. Any Michigan taxpayer who pays more than 3.5 percent of their household income in property taxes is eligible for benefits under the circuit breaker law. Household income means income from all sources.

Renters may also qualify for a cash reimbursement under the circuit breaker law. 20 percent of one’s rent is considered equal to a property tax as long as the building being rented is taxed under property tax laws. So, if 20 percent of your rent is more than 3.5 percent of your household income, then you can get cash back from the state of Michigan using form 1040cr. This is especially useful information for college students if they live apartments and not dorms.

There is a “poverty exemption” in the state of Michigan. It is granted for only one year at a time. Under this law, the Board of Review may order your State Equalized Value to be reduced or even set a zero valuation (a complete exemption). Such a reduction forces the property’s Taxable Value to be reduced and thereby causes a reduction in your annual tax burden.

Ensure that the proper millage rates have been applied. Under Michigan law there is a “Homestead” millage rate which applies to qualified residential and agricultural properties. Qualified means you reside in the structure as your home to the extent required by law. The homestead rate is much lower than a “non-homestead” rate and often represents a tax reduction of more than 33 percent.

Senior Citizens, the disabled and others may qualify for a greater reduction under circuit breaker laws than the ordinary working stiff, but each category receives benefits.