IAAO Study Finds No Systemic Over-Assessment in Detroit

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Aerial view showcasing the residential areas of Detroit post-assessment reforms.

News Summary

An independent study by the International Association of Assessing Officers reveals that Detroit’s property tax assessments are compliant with Michigan laws, debunking claims of widespread over-assessment. The city’s average property assessment currently stands at 50.1%. Detroit officials dispute previous studies that suggested low-value homes are overtaxed. The findings will be discussed by the City Council, while the Mayor announces a significant increase in property values, underlining the city’s economic growth and assessment reforms aimed at providing tax relief.

Detroit – An independent study conducted by the International Association of Assessing Officers (IAAO) has determined that there is no systemic over-assessment occurring in Detroit’s property tax assessments. This finding comes amidst ongoing criticism from various stakeholders, including the Detroit City Council, who have raised concerns about the potential over-taxation of homeowners, particularly those with low-valued homes.

The IAAO study was initiated in response to claims from critics who argued that approximately 65% of Detroit’s lowest-value homes had been assessed at more than 50% of their market value. This assertion was based on a prior examination by the University of Chicago, which city officials have disputed, citing flaws in the study’s methodology for failing to consider Michigan state law. According to the IAAO results, the study confirmed compliance with Michigan property tax assessment laws, shoring up the claims of city officials.

Detroit’s Chief Assessor, Alvin Horhn, reported that the city’s average level of property assessment currently stands at 50.1%, within a confidence interval ranging from 49.7% to 50.5%. Michigan legislation mandates that property tax assessments do not surpass half of a property’s market value. Analyzing reports from the last two years, the Coalition for Property Tax Justice has submitted close to 800 appeals concerning property assessments, indicating suspicions of inflated valuations leading to excessive taxation.

Official data from the city indicates that around 98% of initial property assessments were found to be accurate, resulting in no changes to taxable values. Critics, however, contend that there is inconsistency in the data, claiming some lower-value homes are assessed at rates that could be as much as double their actual market value. Horhn acknowledged that current assessment laws may not accurately reflect the unique property sales methods prevalent in Detroit, such as quick claim deeds and land contracts.

The Detroit City Council is set to further evaluate the IAAO study’s findings during an upcoming committee meeting. In a separate announcement, Mayor Mike Duggan revealed a substantial 19% increase in Detroit’s overall property values last year, totaling over $10 billion for the first time in a quarter-century. Property tax assessment notifications will be distributed soon, with tax liabilities due this summer and the following winter. Homeowners who purchased their properties before 2024 are assured that any increase in value will not exceed a ceiling of 3.1% per annum.

Since 2017, property values in the city have surged from $2.8 billion to $10.1 billion, a change attributed largely to ongoing neighborhood enhancements and economic growth. Property owners who wish to contest their assessments are encouraged to submit appeals either online or in writing, abiding by the established procedural guidelines.

In a bid to rectify property tax policies, Detroit has implemented reforms aimed at improving the accuracy of assessments and enhancing the communication lines between the city and homeowners regarding their property taxes. Many homeowners have noted significant increases in their property values over recent years, thereby fostering the prospect of generational wealth. Additionally, the Homeowners Property Exemption (HOPE) program offers potential tax relief to homeowners experiencing financial difficulties, allowing for reductions in property tax obligations ranging from 10% to as much as 100%.

To further assist those in need, an open house event has been announced for the HOPE program, inviting residents to learn more about the resources available and to apply for assistance with their property taxes.