Questions and Answers regarding your
Notice of Assessment
What do the terms Assessed Value, State Equalized Value
and Taxable Value mean on my Notice of Assessment?
A basic knowledge of these terms will help you better
understand Michigan property tax law.
• Assessed Value—the assessed value helps determine market
value.
The assessor is constitutionally required to set the
assessed value at
50% of the usual selling price or True Cash Value of the
property.
• State Equalized Value (SEV)—SEV is the Assessed Value that
has
been adjusted following county and state equalization. The
County
Board of Commissioners and the Michigan State Tax Commission
must
review local assessments and adjust (equalize) them if they
are above
or below the constitutional 50% level of assessment.
• Capped Value—Capped Value under Proposal A increases from
year to
year by 5% or the rate of inflation, whichever is lower.
Improvements to
the property will also increase the Capped Value more than
the rate of
inflation. A sale or the transfer of ownership will “uncap”
the property and
establish a new SEV and Taxable Value.
• Taxable Value—Taxable Value is the lower of SEV or the
Capped Value.
How does the assessor determine my Assessed Value?
To insure properties are assessed uniformly and at 50% of
market value, the assessor is using a one year sales study.
The sales study for the 2010 assessments ran from October 1,
2008 through September 30, 2009. The sales are then
organized by economic neighborhoods by the assessor. An
economic neighborhood can be a single subdivision or a
grouping of subdivisions with similar characteristics. If
the sales in a certain economic neighborhood indicate an
increase or decrease then all of the properties in that
economic neighborhood will be changed by what the sales have
indicated. This insures all properties are assessed at 50%
of market value as of December 31, 2009.
What determines the Taxable Value?
On March 15, 1994 Michigan voters approved the
constitutional amendment known as “Proposal A.” The Taxable
Value was created as a part of this legislation. Taxable
Value can only increase each year by 5% or the rate of
inflation, whichever is lower. The Taxable Value on the
property is said to be “Capped” if the property owner has
not had any additions or losses on the property or did not
purchase the property in the preceding year. The legislators
who wrote and put Proposal A on the ballot intended to put a
cap on the value of the property so that taxpayers would not
be as affected by a robust and rising housing market and a
significant increase in taxable SEV. The intention was to
tie the increase in taxable valuation to the inflation rate
so that it would be more affordable for and would benefit
those residents who intended to remain at their properties
for longer periods of time.
Property values in my neighborhood have been decreasing.
Will my property valuation be decreasing as well?
If you have owned your property for a fair amount of
time, more than likely, your State Equalized Value (SEV)
exceeds your Taxable Value. If this is the case, a decrease
in the real estate market will be reflected in a decreased
SEV.
However, the Taxable Value during most of those previous
years was only increasing at the rate of inflation and not
at the rate of housing prices. In the case of a longtime
property owner the SEV might decrease while the Taxable
Value increased but still remained below the SEV.
Does that mean I’ll pay more property taxes instead of
less?
If housing values continue to decline and the SEV falls
below the Capped Value then your Taxable Value will be based
on the lower SEV.
Why won’t my taxes decrease if my property value is
going down?
Proposal A allowed most residents to pay property taxes
on less than 50% of their market value by “capping” their
Taxable Value. This has caused for many property owners a
great disparity between the higher SEV and the lower Capped
/ Taxable Value. The assessor will reduce the SEV to reflect
the 12 month decrease in property values. If the reduced SEV
is still greater than the Capped Value then the inflation
adjusted Capped Value, which is .997 this year, is used to
determine Taxable Value.
Will my taxes ever go down?
If property values continue to decrease, the SEV could
eventually decline and fall below the Capped Value. If this
happens then the lower SEV will cause a decrease in Taxable
Value which would then lower your property tax liability.
If you happen to be a property owner who purchased a
property in the last few years and you have decreasing
property values in your neighborhood, your SEV could fall
below your Capped Value sooner than someone who has owned
their property for a longer period of time.
What are some of the advantages about the Proposal A
legislation?
The biggest advantage of Proposal A is that property
owners were not required to pay taxes against housing rate
increases or SEV but rather, the Capped / Taxable value
based on the rate of inflation. The Taxable Value, in most
cases, is significantly lower than the SEV of the property.
This is meant to help people remain in their homes longer
and not force them to sell their property due to higher
taxes as was previously based upon housing value increases.
Tax increases under Proposal A are now based on the rate of
inflation.
What are some of the disadvantages about the Proposal A
legislation?
Unfortunately, there have been a few downfalls.
Two big downfalls that we hear are:
1. Neighbors paying completely different tax amounts
2. An uneasiness about moving to new properties because of
the fear of
“uncapping” and paying a higher tax rate.
What is a Principal Residence Exemption?
If you own and occupy a home on your property on or
before May 1st, you are entitled to a Principal Residence
Exemption. This will result in an exemption for a portion of
local school operating taxes on your summer tax statement.
On the Assessment Notice, the exemption will be illustrated
by a 100.00% if you are eligible. You are only entitled to
one Principal Residence exemption in or out of Michigan.
Can I contest my Assessed Value and Taxable Value?
Every property owner has the right to appeal their
assessments. However, the opportunity only comes once a year
and if the opportunity is missed, there is not another
opportunity until the following year. Your Assessment Notice
will provide you with the dates and times for the March
Board of Review. If you wish to contest your assessment, you
must either appear before the board or send your appeal to
the March Board of Review. Protest at the March Board of
Review is necessary to protect your right to further appeals
to the Michigan Tax Tribunal for valuation and exemption
appeals. In other words, the Michigan Tax Tribunal will not
hear cases for residential properties that were not first
been before the local March Board of Review.
What documentation do I need to appeal my assessment?
Residents who wish to appeal their value need a petition
form and should provide documentation to support their
appeal. A “Petition to the Board of Review” must be
completed before appearing before the Board. The petition
form can be obtained at township hall just prior to your
Board of Review appointment; it can also be obtained from
the Township Assessing office or downloaded off the Township
website.
Residents should provide documentation of comparable houses
in your neighborhood that sold at lower prices than your
appraised value or provide an appraisal reflecting the fair
market value of your home during the previous 12 month sales
period. The Assessing office has sales information where you
can look at sales in your neighborhood and compare them to
your home. It is also a good idea to review your field
inspection sheet in the Assessing office for accuracy. If
there is an error, it should be brought to the attention of
the Assessing office.
Please call the Assessing office to review your assessing
record card, ask questions or make an appointment: call
734-354-3269.
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