What is the difference between the Assessed Value and the Taxable Value?
Each year the Assessing Office must calculate the Assessed Value and Taxable Value of each property. In prior years, when determining the Assessed Value, the assessor’s office used a 2 year sales study to analyze market values within each neighborhood, (the study period for the 2007 assessments was 04/01/04 to 03/31/06). Property Tax law allows the use a one year study period during documented periods identifying a declining economy. The study period used in determining the 2008 Residential assessments is 10/01/06 through 9/30/07. A review of all arms length sales within each neighborhood for the required study period is used to determine individual Assessed Values. Commercial and Industrial properties were studied using a 2 year study of 04/01/05 through 03/31/07.
The Taxable Value is the value to which the millage rate is applied, thereby determining your taxes. The Taxable Value is calculated by adding the CPI or 5% (whichever is less) to the prior years Taxable Value. Proposal A intended to put a cap on the Taxable Value of property so that taxpayers wouldn’t be as affected by a strong economy and significant increases in valuation, the intention was to make changes to the Taxable Valuation more gradual by tying it to the rate of inflation.
Sales prices in my neighborhood have been decreasing. Will my property valuation decrease as well?
If you’ve owned your property for a significant amount of time, it is likely that your Assessed Value exceeds your Taxable Value. If this is the case, a decrease in market value as determined by city sales studies, would result in a decreased assessed valuation and Assessed Value. The Taxable Value however, is required by the Michigan Constitution to increase each year by the rate of inflation or 5%, whichever is lower. In the case of a long time property owner, the Assessed Value could decrease, while the Taxable Value would increase. The Taxable Value cannot be higher than the Assessed Value.
How does that impact my tax bill?
Because the taxes are based on the Taxable Value rather than the Assessed Value or SEV, even with a decrease in the Assessed Value, the taxes could still go up.
I just bought my house. Will the Assessed Value automatically be half of what I paid?
By state law, a home’s Assessed Value is not half its purchase price, but half of its market value. The study period and process identified in paragraph 1 is used to determine market values. The Assessor and the Board of Review must follow the same procedures for determining the Assessed Value (SEV) of properties that have experienced a “transfer of ownership” as are used for properties that have not experienced a “transfer of ownership”.
What does it mean for a property to “Uncap”?
A property is said to “uncap” the year after there is a change in ownership. When an “uncapping” occurs, the property’s Taxable Value is “uncapped”, and made equal to the Assessed Value.
If I refinance my home, will it “uncap”?
No, if the property is still under the same ownership, but was just refinanced, the Taxable Value remains capped.
What types of home improvement will increase my taxable value?
Normal maintenance and repair items such as: replacement siding, roof, furnace, windows, remodeling of kitchens or baths, and other maintenance items, will not cause an increase in the Taxable Value of a property. New items that had not been previously assessed, however, are added to the Taxable Value. Examples of new items could be: deck or patio, addition, finished basement, air conditioning, or new bathroom.
How to reach us –
Assessor files and sales information are available to the public at City Hall between the hours of 8:30 to 5:00, Monday through Friday. For questions, please contact us at:
Catherine Scull, Assessor ph. 429-4907, ext 2208
Joyce Witt, Assistant Assessor ph. 429-4907, ext 2218
