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HB 5865

Property tax: assessments; sales of certain deed-restricted properties; prohibit the use of as comparable sales for assessment purposes in certain circumstances. Amends sec. 27 of 1893 PA 206 (MCL 211.27).

2023-2024 Regular Session Introduced by Felicia Brabec and 22 co-sponsors

Michigan bill prohibits using deed-restricted property sales as comparables for tax assessments to prevent undervaluation of unrestricted properties.

bill electronically reproduced 06/26/2024
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Bill Summary · HB 5865

Legislative bill overview

HB 5865 would amend Michigan's property tax assessment law to prohibit the use of sales of deed-restricted properties as comparable sales when determining property tax assessments. Deed-restricted properties typically have legal limitations on use, occupancy, or development that reduce their market value compared to unrestricted properties. The bill aims to prevent assessors from using these artificially lower-priced sales to justify lower assessments on similar unrestricted properties.

Why is this important

Property tax assessments directly determine the tax burden on homeowners and businesses. Using inappropriate comparable sales can systematically undervalue properties, reducing tax revenue for local governments while potentially shifting the tax burden to other property owners. This is particularly significant for affordable housing and community land trust properties, where deed restrictions intentionally reduce sale prices for public benefit purposes.

Potential points of contention

  • Assessor discretion and valuation methodology: Assessors may argue that deed-restricted sales provide relevant market data and removing them limits their analytical tools, potentially making assessments less accurate in mixed-use neighborhoods
  • Affordable housing impact: While protective of market-rate properties, the bill could indirectly increase tax pressure on affordable housing programs that rely on deed restrictions, affecting housing affordability policy goals
  • Definition ambiguity: The bill text doesn't specify which deed restrictions trigger the prohibition, creating potential legal disputes over what qualifies and giving assessors discretion in application

Compiled from official sources — confirm details with the bill’s official record.

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