NEZ Tax Abatement Questions

[ABetterDetroit]

One thing this thread makes clear is that's it's ridiculous that properties of equal value in the same tax district are taxed at such different rates.

Our local real estate tax scheme is as screwed up as our federal tax code and every other tax scheme [[except sales taxes) formulated by the geniuses in Washington, Lansing and our various municipalities.

It's FUBAR.

http://www.thefiscaltimes.com/2015/0...Property-Taxes

Do any of the states in this 'Worst 10 list' have a disaster of a housing market under performing nationally consistently? High rent taxes and awful home appreciation will never attract residents. If it did, Detroit would be the most prosperous city in America.

[SammyS]

It's FUBAR.

http://www.thefiscaltimes.com/2015/0...Property-Taxes

Do any of the states in this 'Worst 10 list' have a disaster of a housing market under performing nationally consistently? High rent taxes and awful home appreciation will never attract residents. If it did, Detroit would be the most prosperous city in America.

From the link

8. Michigan: 1.78 percentMedian Property Tax Paid on Homes: $2,090
Median Home Value: $117,500
Detroit’s mayor announced early this year that more than half of the city’s residents will see their property tax assessments fall by 10 percent as part of a citywide real estate reappraisal, with some residents getting 20 percent reductions.

Is this real?

[ABetterDetroit]

From the link



Is this real?

Yes. When tens of thousands of people are losing their homes annually for unpaid property taxes and the lion's share of the homes were drastically over assessed due to years of sharply falling housing values, drastic action was required. Assessments were lowered, not the the tax rate. The tax rate itself is still crippling any new owner occupied housing in the city, thus the need for the NEZ program that this thread is discussing.

[3WC]

I do not agree with you, ABetterDetroit, when you say there is a need for the NEZ program.

It's just another income redistribution policy which takes money out of most people's pockets [[those who have to pay higher taxes to make up for the taxes the NEZ folks don't pay), and those NEZ beneficiaries who suck at the public tit when they avoid paying taxes that have to be paid by others.

The NEZ program is an artificial gimmick to make it appear that the economy is doing much better than it is.

We're just fooling ourselves if we think that things must be getting better because all those buildings are being rehabbed and some newly built. Yeah, and we're helping to pay for it.

If things don't make economic sense based on the ground rules we all have to play by, then things should not be built. Eliminating NEZ and many other corporate welfare incentives [[every tax credit on the books) would mean that when the market for a particular project exists, without all the taxpayer subsidies, things would get built. Otherwise, not.

The City and the State don't have any of their own money. They only have our money. And we're fools for letting them give it away, however well intentioned, for the temporary benefit of a few.



.

[ABetterDetroit]

I do not agree with you, ABetterDetroit, when you say there is a need for the NEZ program.

It's just another income redistribution policy which takes money out of most people's pockets [[those who have to pay higher taxes to make up for the taxes the NEZ folks don't pay), and those NEZ beneficiaries who suck at the public tit when they avoid paying taxes that have to be paid by others.

The NEZ program is an artificial gimmick to make it appear that the economy is doing much better than it is.

We're just fooling ourselves if we think that things must be getting better because all those buildings are being rehabbed and some newly built. Yeah, and we're helping to pay for it.

If things don't make economic sense based on the ground rules we all have to play by, then things should not be built. Eliminating NEZ and many other corporate welfare incentives [[every tax credit on the books) would mean that when the market for a particular project exists, without all the taxpayer subsidies, things would get built. Otherwise, not.

The City and the State don't have any of their own money. They only have our money. And we're fools for letting them give it away, however well intentioned, for the temporary benefit of a few.



.

I agree with you completly the NEZ law sucks. The problem is John Engler didn't actually reform the property tax laws in the state of Michigan very well or we would not be on this list.

http://www.thefiscaltimes.com/2015/0...Property-Taxes

Instead he passed laws like the Neighhborhood Enterprize Zone thinking that would help overcome a serious problem. Until the day when actual property tax reform happens this is the tool that was handed to fix the issue of devolopment in economically challenged areas.

[Wesley Mouch]

I'm not sure how anyone suggests we keep aging schools open and heated, or what bare bones city services we have left running across 140+ square miles, in a city built for over 1.5 million people that now has about 700,000 people. With bottomed-out housing values and abatements [[as pointed out here) on almost all new or renovated buildings. And particularly with our lovely "don't give them a dime, give them an emergency manager and fuck them if they want clean water, etc." governor and legislature in Lansing. Yes, the situation sucks, but the floor is open to some suggestions beyond yelling at long-gone Kwame, comparisons with already wealthy suburbs, and aimless whining.

1) Cap all pensions at $60,000.
2) Make public employees work under a fair civil service system with working conditions set by management, not by collective bargaining.
3) Make it 40 and out, not 30 and out.
4) Combine Police and Fire into public safety.
5) Eliminate any department whose function is already covered by other levels of government, such as Human Rights Departments.
6) Stop all preferrential hiring based on zip code and start hiring based on qualifications and productivity
7) Publish benchmarks showing we Detroit pays for services by department in comparison to other cities
8) Adjust side of Water Board staff down by 40%, which would be 1/2 of that recommended reduction.
9) Encourage Charter schools, where things are not all rosy, but at least the poor schools have incentive to get better - and not just

Or you can decide that the City as a jobs program is better. The current logic of the left is that more jobs means more growth. So we might instead try mandating a doubling of city jobs and an increase in city's minimum wage. Then the city workers will spend the money in city communities and the velocity of money will be increased and all problems will solve themselves.

[BillyBBrew]

Future non-NEZ annual property taxes will basically be [[selling price/2000) * Millage rate. The Current millage rate will be 63 if homesteaded, 85 if non homestead. A 300,000 condo will cost you $9450 in property taxes each year if homesteaded.

So my questions is:

1) Once the abatement runs out are the SEV and Taxable Value at that time equalized like they would be if you had just purchased the house or would the limits of Proposal A and the Headlee Amendment apply for the lenght of time you owned the property and you'd pay based on the taxable value, as opposed to the SEV?


Thanks!

[stinkytofu]

Bump...

If you are looking at a condo going for $150,000 - with an NEZ expiring in a few years - taxes right now would be like $5,200 if the abatement wasn't in place, correct?

[ABetterDetroit]

In Detroit you are correct.

In total disclosure though, there is another 2 mills increase that was approved on the ballot just last month that has not cycled in yet but will in January.

Next up for consideration is that under the current law in Michigan and the political climate in the city they have nowhere to go but higher with every election. It doesn't seem to matter that even though people leave in record numbers for much lower tax rates, [[actually anywhere else in Michigan or virtually the entire United States for that matter) absolutely nothing is being done to stop the problem with the exception of billionaires. They have massive relief on the horizon in the state legislature with the next session.

http://www.forbes.com/sites/shreyaag.../#1baf5ad52176

[stinkytofu]

Didn't realize another 2 mills increase occurred.

The article below sums it up well - what a complete mess of a situation.

http://www.detroitnews.com/story/opi...oint/86268916/

Every prospective buyer of a NEZ property right now should read that article. Unless something changes [[who knows) they are walking into a landmine without even potentially knowing. Very frustrating - I'm just happy to read before making a purchase. 'Burbs it may be.

[ABetterDetroit]

It is what it is.

http://www.freep.com/story/news/educ...nted/93486384/

[stinkytofu]

Per the DetNews article this summer it's clear the city knows this is a big issue.

Nonetheless, is anything firmly on the table? This is a pressing issue for me and likely many other potential new homeowners in the city.

[stinkytofu]

Per the DetNews article this summer it's clear the city knows this is a big issue.

Nonetheless, is anything firmly on the table? This is a pressing issue for me and likely many other potential new homeowners in the city.

...bump...

[SammyS]

My bill went up heaps. Passed as much as I can onto the tenant but it's far from making up for it. I knew what I was getting myself into so no regrets yet but man, it's a killer. Something needs to be done quickly or I'm afraid it will stifle the resurgence.

[stinkytofu]

My bill went up heaps. Passed as much as I can onto the tenant but it's far from making up for it. I knew what I was getting myself into so no regrets yet but man, it's a killer. Something needs to be done quickly or I'm afraid it will stifle the resurgence.

Yeah - I am considering a house with an abatement ending in five years. I just can't wrap my head around if a new policy will come in to help with increasing taxes and how the ending abatement will impact property value.

[Cristo]

The NEZ abatement last 15 years from the date it was issued. That date will vary according to when the property was originally occupied. The NEZs value depends on the property type and whether it was new build or rehab. Your realtor will have to ask the current owner when the NEZ expires and what the NEZ taxes are. Tell them you want it in writing. That way you can sue them if they fudge the numbers. The NEZ is not renewable. It's a one time shot.

Future non-NEZ annual property taxes will basically be [[selling price/2000) * Millage rate. The Current millage rate will be 63 if homesteaded, 85 if non homestead. A 300,000 condo will cost you $9450 in property taxes each year if homesteaded.

[[bumping an old thread)

Currently in this predicament and looking for some guidance...

Purchased a condo in November not knowing that the NEZ abatement would expire [[or that they even existed). My taxes will go from $1500/yr to about $5000/yr.

If I would have known at the time of purchase, that would have been a huge negotiation point for me... or the given me the option to walk away from the deal.

Should my realtor have let me know about the NEZ taxes? Maybe the selling party should have disclosed?

What type of recourse do I have?

=> Separately, I'm wondering if there have been any programs passed under Duggan to help with property taxes that I can take advantage of.

[djtomt]

Should my realtor have let me know about the NEZ taxes? Maybe the selling party should have disclosed?

What type of recourse do I have?

=> Separately, I'm wondering if there have been any programs passed under Duggan to help with property taxes that I can take advantage of.

Your realtor definitely should have informed you. Most NEZ's estabished in the late 90's/early 00's have expired or will expire soon. I live in a NEZ. It was a big consideration when I purchased. That tax increase is a BIG deal.

Not sure if you have any recourse though. Buyer beware and all that. If you do find recourse, or if anyone here knows how to get it, please share. That info would be super useful. TIA.

[stinkytofu]

[[bumping an old thread)

Currently in this predicament and looking for some guidance...

Purchased a condo in November not knowing that the NEZ abatement would expire [[or that they even existed). My taxes will go from $1500/yr to about $5000/yr.

If I would have known at the time of purchase, that would have been a huge negotiation point for me... or the given me the option to walk away from the deal.

Should my realtor have let me know about the NEZ taxes? Maybe the selling party should have disclosed?

What type of recourse do I have?

=> Separately, I'm wondering if there have been any programs passed under Duggan to help with property taxes that I can take advantage of.

Hate to say it, but you are likely out of luck. I walked away from my deal while under contract. Your realtor should have let you know. To be fair, my realtor was clueless [[first time he'd worked in city) and I was the one that discovered this. Of course it'd be nice if the seller informed you, but no way they'd want you to know and they technically aren't covering anything up.

You mind me asking where your condo is? I did quite a bit of due diligence and spoke to people who had a handle on this. One individual said that it's very unlikely they'd re-up the NEZ's in vastly improved neighborhoods [[downtown, midtown, corktown, etc.). They'd spread them to new neighborhoods to help spur growth which is pretty much the whole point of them.

Article below touches on it.

https://www.freep.com/story/money/20...ive/314826002/

[Cristo]

Well I did a bunch of research and burned a PTO day, but I think I figured it out.

Let's see if I can lay this out simply for others who stumble upon this thread via Google. Hope this info will help people out.

Expiring NEZ abatement:
NEZ abatements are filed by the builder of a development for rehab or new construction. If they expire, there is no way to renew.

NEZ Homestead [[NEZ-H):
From what I understand, properties that fall into select neighborhoods in Detroit qualify for NEZ-H abatements. I have a map of the qualifying neighborhoods below.

This only applies to properties that are your homestead.



How to File:
1. Go to the Office of the Assessor in the city county building, floor 8.
2. Grab a ticket and wait in line [[read some articles, look up parts for your Jeep, etc).
3. Ask for an NEZ-H form [[they're not out in front, someone from the office has to get one for you). The form is titled "Application for Neighborhood Enterprise Zone Homestead Facility Certificate".
4. To file the form you will need:
- Three copies of recorded conveyance [[deed/land contract)
- One original and two copies of the completed NEZ-H application [[the assessor will make copies for you for a small fee).
- Copy of your drivers license. License has to show same NEZ-H address for which you are applying.
- Property has to be your primary residence.

One note is that you have to certify that you will make an improvement of at least $500 to the property that you are applying for.

Additional Info:


Links for Further Information:

https://data.detroitmi.gov/Property-Parcels/NEZ-H-Districts/98iq-nfrr

https://detroitmi.gov/sites/detroitm...ce%20Facts.pdf

https://detroitmi.gov/departments/of...ffice-assessor

https://www.michigan.gov/taxes/0,467...3184--,00.html

[DetBill]

If you want what I feel is a very reasonable deal on property taxes, and co-ops priced very reasonably which are really beautiful places, my 1300 E. Lafayette co-op is a prime example. Our two bedroom two bath corner unit on the 17th floor overlooking the whole city, is a fabulous unit, unbelievable view, especially at night over the skyline .. never get tired at looking out day or night...we have opened up the whole living, kitchen, dining areas as there is glass everywhere with NO BUILDINGS even close looking in, nor will there ever be in our northwest corner as 1300 owns all the way to Rivard Street.great building services [[ doorperson, package clerk, maintenance people, great workout room, yoga room, two manned outdoor pools , a great area, and a great building with very nice people in the building and neighborhood. We walk to everything, which keeps us healthy. Our property tax element on our unit is approximately $2000 a year, which is very reasonable, and it’s tied to a cost-of-living increase each year. Its part of our monthly fee of 1400. a month which covers everything, including heating, cooling, water, taxes,two parking spaces and cable also. . You purchase the equity shares as it is a co op, anywhere from 135,000 to 190,000 approx.[[ which can be refinanced ) depending on the unit upgrades,height, location etc,,When I see what they want for some of these other properties going on in downtown and midtown, not only for purchase price but for eventual taxes, I always feel 1300 E. Lafayette is a great deal, none of these places come close to our views. We feel very safe as is our cars . Its a very quiet building and unit, the building was built way back with extra sound insulation. I feel extremely good bang for the buck in todays market, been here a long time, no reason to leave looking at the alternatives downtown.

[shasha]

Thanks a bunch Cristo for sharing this information!

[ABetterDetroit]

Thanks a bunch Cristo for sharing this information!

I agree. You did an excellent job with every detail. I myself have found the people on the 8th friendly and accommodating. If you get into it nitty gritty [[necessary in this state due to the dolts in Lansing intentionally trying to screw us over) up there in Colman Young, happy people introduce you to experts. Someone who knows the whole game you need to play. This trip should be mandatory for any first time home buyer in Detroit.

If you don’t mind sharing, Cristo, how many years left do you have on your new place?

[Richard]

12. Can the duration of a Neighborhood Enterprise Zone [[NEZ) Certificate be extended?

https://www.michigan.gov/documents/t...2_490111_7.pdf

[swingline]

Well I did a bunch of research and burned a PTO day, but I think I figured it out.

Let's see if I can lay this out simply for others who stumble upon this thread via Google. Hope this info will help people out.

Expiring NEZ abatement:
NEZ abatements are filed by the builder of a development for rehab or new construction. If they expire, there is no way to renew.

NEZ Homestead [[NEZ-H):
From what I understand, properties that fall into select neighborhoods in Detroit qualify for NEZ-H abatements. I have a map of the qualifying neighborhoods below.

This only applies to properties that are your homestead.



How to File:
1. Go to the Office of the Assessor in the city county building, floor 8.
2. Grab a ticket and wait in line [[read some articles, look up parts for your Jeep, etc).
3. Ask for an NEZ-H form [[they're not out in front, someone from the office has to get one for you). The form is titled "Application for Neighborhood Enterprise Zone Homestead Facility Certificate".
4. To file the form you will need:
- Three copies of recorded conveyance [[deed/land contract)
- One original and two copies of the completed NEZ-H application [[the assessor will make copies for you for a small fee).
- Copy of your drivers license. License has to show same NEZ-H address for which you are applying.
- Property has to be your primary residence.

One note is that you have to certify that you will make an improvement of at least $500 to the property that you are applying for.

Additional Info:


Links for Further Information:

https://data.detroitmi.gov/Property-Parcels/NEZ-H-Districts/98iq-nfrr

https://detroitmi.gov/sites/detroitm...ce%20Facts.pdf

https://detroitmi.gov/departments/of...ffice-assessor

https://www.michigan.gov/taxes/0,467...3184--,00.html

As a reminder for potential buyers who are unfamiliar with the the NEZ program, the NEZ-H abatement is much smaller than the more well-known NEZ New or Rehab programs that reduce taxes by approximately 80%. The NEZ-H abatement is only around 15%. Many expiring NEZ New/Rehab properties are located in areas of the city where they can qualify for the NEZ-H abatement but the increase from the New/Rehab abatement is still going to be steep.