Q: My tax bills are
calculated based on taxable value instead of state equalized
value. What does taxable value mean to me?
A. Taxable values began
in 1995 as part of Proposal Taxable values are adjusted
each year by the Consumer Price Index (CPI) or 5% whichever is less until property title transfer. Your taxable
value cannot be greater than your state equalized value. In
other words, Proposal A “capped” taxable value increases by
the CPI or 5% whichever is less.
Q: Can my taxable value
increase more than the rate of inflation?
Yes, if:
A.
A sale and/or title transfer occurs. In the year
following a sale and/or title transfer, the property becomes
“uncapped” making the state equalized value (SEV) and
taxable value the same. Michigan law states the actual sale
price must not be the sole basis for the new SEV for that
property.
A.
New construction to a property is added to the
taxable value.
A.
The value of items omitted from the previous year(s)
assessed value is added to the taxable value.
Q: If my taxes are not
based on taxable value, why is there an assessed value?
A. The Michigan Constitution
still requires all properties to be assessed annually at 50%
of market value.
Q: How was my assessed
value determined?
A. Assessors use a state
required mass appraisal method to value properties. We
estimate land values from sales data and building values
from a state cost manual. Then, we analyze sales data from
your neighborhood and develop factors we use to further
adjust our estimates to reflect local market value.
Q: I haven’t made any
improvements to my house. Why did my assessed value change?
A. Your market value can
change even when there is no physical change to your
property. A growing economy or increasing population can
push housing values steadily upward. The Assessor does not
create increases in property value. He/she recognizes
changes as they occur and must adjust values accordingly.
Q: Why is my change in
assessed value different than my neighbor’s?
A. Assessed value changes
vary according to the individual characteristics of houses
in relation to sales in your area. Building style, size and
amenities such as porches, decks, garages, and extra
bathrooms affect value estimates.
Q: My assessed value
didn’t change, but my taxable value increased. Why?
A. The current sales
information for your neighborhood may show no value increase
over last year’s value. However, the taxable value is tied
to the Consumer Price Index and calculated annually causing
an increase in your taxable value.
Q: How do I know if my
assessed value is reasonable?
A. Compare the market value
of your property with sales of similar homes in your
neighborhood. The sales should be on homes that are similar
to yours in size, style, age and condition. The Assessor’s
Office has sales information to assist you. (Assessed Value
= 1/2 of Market Value).
Q: I just bought a new
house, why isn’t my assessed value one half of my sale
price?
A. Michigan law prohibits
assessors from basing values on one sale price. We are
required to value your property based on the methods used to
value other properties in your area. While we hope our
value estimate is close to your sale price, it is an
estimate and may not be the same as your recent sale.
Q: What if I disagree with
the assessed value on my property?
A. Appeals are heard each
year at the March Board of Review, either by letter or in
person. This step preserves your appeal rights for further
action at Michigan Tax Tribunal.
Q: What is a property
transfer affidavit?
A. Changes in state law after
Proposal A created the property transfer affidavit. An
affidavit must be filed whenever title of real estate or
buildings on leased land is transferred. It must be filed
even if you are not recording a deed. Filing with the local
assessor is mandatory.
Q: Where do I obtain and
file the affidavit?
A. Property transfer
affidavits can be obtained from closing agents such as a
title office, financial institution or attorney. They can
also be obtained at your local assessor’s office. The new
owner must file the affidavit with the local assessor within
45 days of the transfer.
Q: What is the purpose of
the affidavit?
A. Assessors use the
affidavit to make sure that property is assessed properly
and receives the correct taxable value.
Q: What is a “transfer of
ownership”?
A. State law defines a
“transfer of ownership” as “the conveyance of title to or
from one person or entity to another, including the
beneficial use of the property”. Transfers include deeds,
land contracts, and a variety of transactions outlined on
the back of the affidavit form.
Q: What happens after
ownership of a property is transferred?
A. The Michigan
Constitution limits how much a property’s taxable value can
increase while owned by the same person. Once the property
is transferred, the assessor must change the taxable value
to 50% of the property’s usual selling price. In other
words, in the year following the sale the taxable value
equals the current state equalized value.
Q: Are certain types of
transfers exempt from adjustment?
A.
YES. Some of the exempt transactions include changes in
ownership solely to exclude or include a spouse,
transferring a property into a trust where the sole
beneficiary is the creator of the trust or that person’s
spouse, redemption from a tax sale, or transfer to effect a
foreclosure. Some of the exempt transactions are listed on
the affidavit form and full descriptions are in MCL Section 211.27a(7)(a-m).
Q: What is the Principal
Residence (Homestead) exemption?
A. State law grants a
Principal Residence (Homestead) exemption from local school
operating taxes for Principal Residence (Homestead) and
Qualified Agricultural properties. Currently this is a
reduction of 18 mills of school tax.
Q: How do I qualify for
the exemption?
A. To qualify you must own
the property and occupy it as your legal, primary
residence. The deadline to qualify for any given year is
December 31st of that year. Buyers who close
and/or occupy the residence after that date are eligible for
exemption in the following year.
Q: What form do I use?
A. If this is your first
Principal Residence (Homestead) application or you are
buying a property that was not previously homesteaded, you
can use the Affidavit for Principal Residence (Homestead)
Exemption (2368). After 2004, the form will be called the
Affidavit for Principal Residence Exemption to avoid
confusion with the Homestead Property Tax Credit available
when filing your Michigan income tax return.
Q:
What if I stop using my Principal Residence (Homestead) as
my primary residence?
A. If you stop using
your exempt property as your principal residence but are not
selling it, you are required to file a Request to Rescind
Principal Residence (Homestead) Exemption (2602). This form
must be filed within 90 days of the change. The exemption
remains in effect through December 31 of that year.
Q: What if I sell my
house and buy a new one?
A. You need to rescind the
Principal Residence (Homestead) on the house you sold and
request a Principal Residence (Homestead) on your new
house. Use a Request to Rescind Principal Residence
(Homestead) Exemption (2602) form to rescind your old
Principal Residence (Homestead) and the Affidavit for
Principal Residence (Homestead) Exemption (2368) form for
your new Principal Residence (Homestead). The Michigan
Department of Treasury recommends the forms be completed and
distributed by the closing agent who supervises real estate
transactions. Principal Residence (Homestead) forms are
also available from your Assessor or from the County
Equalization Department.
Q: How are my taxes
computed?
A. Taxes are computed
by multiplying your taxable value times the total mills. A
mill is $1.00 per thousand dollars of taxable value. An
easy way to calculate your taxes is to multiply your taxable
value times your applicable millage rate. For instance a
home in Seney Township for 2005 with a taxable
value of $40,000 and with a Principal Residence Exemption x
the millage rate of 16.2243 equals $648.97. One percent
will be added as a collection fee.
Q: Why did my taxes
increase?
Taxes can increase because:
A.
The tax rate increased. Periodically, voters have an
opportunity to renew or approve increases to tax rates at
special elections. If voters approve additional millage,
your taxes will increase.
