NEZ Tax Abatement Questions

[stinkytofu]

All:

I'm considering a few different condos in the city, but am struggling to get some questions answered.

The properties all have a NEZ tax abatement in place, but I can't find documentation about when the abatement expires. Does anyone know where I can locate that information? Additionally, trying to figure out current tax on property with abatement [[not sure how much I trust things like MoveInMichigan), what tax is when abatement expires, and how hard it is to renew abatement. My realtor basically just forwarded me a link to read about the abatement, but no concrete info about specific properties.

I have read quite a bit about how property values go down when an abatement expires as higher taxes obviously makes the property less valuable.

Problem is I'm a rookie home buyer who has no idea what he's doing.

[ndavies]

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.

[stinkytofu]

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.

Wow - great insight, thanks. It appears that the taxes currently on the properties are about $1,000 with abatement and the asking prices are around $130,000. It would be my primary residence so homesteaded. My math shows property taxes will jump up to about $4,000. Yikes.

[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!

[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/

[3WC]

$9,450 in taxes for a $300,000 property is atrocious. Does anyone even fantasize about a Detroit rebirth with such high taxes?

A $300,000 property in Bloomfield Hills/Bloomfield Twp. would be taxed at about $3500, and the services and schools are 100 times better than Detroit.

Detroit taxes evidence the high price of corruption and incompetence of its leaders, which didn't cease just because Kwame went to jail, and 50 years of Democratic control.

If it weren't for Dan Gilbert this place would be dead. Zombie dead. Walking dead. Period.

[Kevgoblue]

$9,450 in taxes for a $300,000 property is atrocious. Does anyone even fantasize about a Detroit rebirth with such high taxes?

A $300,000 property in Bloomfield Hills/Bloomfield Twp. would be taxed at about $3500, and the services and schools are 100 times better than Detroit.

Detroit taxes evidence the high price of corruption and incompetence of its leaders, which didn't cease just because Kwame went to jail, and 50 years of Democratic control.

If it weren't for Dan Gilbert this place would be dead. Zombie dead. Walking dead. Period.

The tax rate for Bloomfield Hills is 36.74 mils. So for a property worth $300K the taxes would be just north of $5,500.

[stinkytofu]

$9,450 in taxes for a $300,000 property is atrocious. Does anyone even fantasize about a Detroit rebirth with such high taxes?

A $300,000 property in Bloomfield Hills/Bloomfield Twp. would be taxed at about $3500, and the services and schools are 100 times better than Detroit.

Detroit taxes evidence the high price of corruption and incompetence of its leaders, which didn't cease just because Kwame went to jail, and 50 years of Democratic control.

If it weren't for Dan Gilbert this place would be dead. Zombie dead. Walking dead. Period.

Yes - very concerning.

I'm a current renter in the city and considering buying. Younger non-profit employee with a modest salary.

Dropping $4,000 in property taxes on a tiny condo - with a high HOA - it's troubling. Plus higher car insurance. Pushes the brain towards suburbs...

[hybridy]

$9,450 in taxes for a $300,000 property is atrocious. Does anyone even fantasize about a Detroit rebirth with such high taxes?

A $300,000 property in Bloomfield Hills/Bloomfield Twp. would be taxed at about $3500, and the services and schools are 100 times better than Detroit.

Detroit taxes evidence the high price of corruption and incompetence of its leaders, which didn't cease just because Kwame went to jail, and 50 years of Democratic control.

If it weren't for Dan Gilbert this place would be dead. Zombie dead. Walking dead. Period.

i think ur bloomfield numbers are very low. i pay over 5k for 'assessed' value of 136k.

[stinkytofu]

Seems like a pretty bad idea to buy a property with just a year or two left on abatement unless you factor in the higher taxes and how the higher taxes impact property value going forward in your initial offer. The condos I'm looking at are quickly escalating in price, but the abatements are expiring soon. What will someone offer five years down the road when the prop taxes are $4,000 compared to $1,000 like now? Guessing it may not end well.

[ndavies]

The NEZs and Duggans home incentive plans all mess with the appraised value of the homes to bring down taxes. These approaches are just Band-Aids. This doesn't fix the core issue of the property tax Millage rates being too high.

[ABetterDetroit]

Anyone considering buying a home in the State of Michigan should be using this:

https://treas-secure.state.mi.us/pte...testimator.asp

Always pull the tax records on what you are considering to making a offer on. There is no reason to take anyone's word on the expiration of NEZ. Find out for yourself.

[3WC]

One of my children owns a home in Bloomfield that would sell today for a little over $300,000. His taxes are slightly over $3500/year.

Obviously, taxes are based on assessed value [[not market value) and his home has appreciated since he acquired it. The tax increases have been capped by state law. If the house were to be sold today for $300,000, the assessment would be based on 50% of the true cash value [[sales price usually) and the taxes would be higher, but not close to $5,000.

Sales prices of residential [[and other) real estate in Detroit are significantly depressed because of the astronomical real estate tax rates [[and city income taxes.) When seeking a mortgage, the loan is generally underwritten based on the residence's occupancy costs [[principle, interest [on the mortgage], insurance and real estate taxes - and frequently utility costs) as a percentage of the mortgagor's income. The higher the real estate taxes, the lower the loan amount, and therefore the buyer is often priced out of the place he wants to buy.

[hybridy]

then im to assume this home was acquired awhile ago...as my market value is above the 300k mark

[Bham1982]

One of my children owns a home in Bloomfield that would sell today for a little over $300,000. His taxes are slightly over $3500/year.

In Bloomfield Hills/Twp., I don't understand how a residential property would have that tax rate. Those are both relatively high tax jurisdictions and a 300k property would probably run around 8k-9k in taxes. Is there something ridiculous with the assessed value?

[ndavies]

In Bloomfield Hills/Twp., I don't understand how a residential property would have that tax rate. Those are both relatively high tax jurisdictions and a 300k property would probably run around 8k-9k in taxes. Is there something ridiculous with the assessed value?

Bloomfield hill/twp tax rate isn't that high. Higher than royal oak but pretty typical for Oakland county. In Bloomfield hills, It's 40 mills for the Birmingham school district and 36.74 for the Bloomfield school District. The township is 3 mills higher. That would put a home with a taxable value of $150k [[$300K market value) at around $5000-$6000 if bought today. If they've owned the home awhile their taxable value would be clamped at the rate of inflation.

[3WC]

Yes. It was acquired a few years ago.

[SammyS]

Good discussion. I've also heard that NEZ does not totally expire but instead the abaitment progressively reduces over a period of time [[like 5 years after the full NEZ expired)

[innercitydoc]

Good discussion. I've also heard that NEZ does not totally expire but instead the abaitment progressively reduces over a period of time [[like 5 years after the full NEZ expired)

And I've heard that the NEZ starts phasing out gradually at 10 years and fully expires at 15. My NEZ is at 10 years this year so I guess I'll find out for certain.

[SammyS]

And I've heard that the NEZ starts phasing out gradually at 10 years and fully expires at 15. My NEZ is at 10 years this year so I guess I'll find out for certain.

No kidding. Explains why there were so many condos at Crosswinds in brush park up for sale in 2015. Phase I was completed in 2000 I believe and therefore......

[EastsideAl]

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.

[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.

[detroitsgwenivere]

My family pays over $6k a year in taxes for 1500sqft bungalow in Royal Oak that is rented out.

http://www.ci.royal-oak.mi.us/depart...sing/tax-rates