Questions and Answers regarding your  Notice of Assessment

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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 two year sales study. The sales study for the 2019 assessments ran from April 1, 2016  through March 31, 2018. 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, 2018.

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 1.009 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 June 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 734-354-3267.