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1. What are property taxes based on?

On March 15, 1994, Michigan voters approved the constitutional amendment known as Proposal “A”. Prior to Proposal “A” property tax calculations were based on State Equalized Value. Proposal “A” established “Taxable Value” as the basis for the calculation of property taxes. Increases in Taxable Value are limited to the percent of change in the rate of inflation or 5%, whichever is less, as long as there were no losses or additions to the property. The limit on Taxable Value does not apply to a property in the year following a transfer of ownership (sale).

2. What Is Assessed Value?

The Michigan Constitution requires that property be uniformly assessed and not exceed 50% of the usual selling price, often referred to as True Cash Value. Each tax year, the local assessor determines the Assessed Value (AV) of each parcel of real property based on the condition of the property as of December 31 (Tax Day) of the previous year. If property values are increasing in your neighborhood, your Assessed Value will likely increase.

3. What Is State Equalized Value (SEV)?

The State Equalized Value (SEV) is the Assessed Value as adjusted following county and state equalization. The County Board of Commissioners and State Tax Commission must review local assessment jurisdictions and adjust (equalize) them so that they do not exceed 50%.

4. What is Taxable Value?

Taxable Value (TV) is the lesser of State Equalized Value (SEV) or Capped Value (CV) unless the property experienced a Transfer of Ownership in the prior year.

5. What is a notice of assessment?

This is the annual notification of what the tentative assessed value and taxable value is for the year in which it is sent. These notices are mailed annually prior to the March meetings of the local boards of review.

The notice indicates the Assessed Value and the Taxable Value for the year in which it is sent. It shows the percentage of Principle Residence Exemption that is on the property, the Classification of the property and if there was or was not a Transfer of Ownership.

6. How are property taxes calculated?

Property Tax Equation

• Property Taxes = Taxable Value / 1,000 x Your Local Millage Rate

The Inflation Rate Multiplier is determined annually by the State Tax Commission. For 2009 A 1.044 multiplier (4.4% increase) has been used in the following examples.

7. What happens when you purchase a home?

When a property, or interest in a property, is transferred, the following year’s State Equalized Value (SEV) becomes that year’s Taxable Value (TV). In other words, if you purchase property, your Taxable Value for the following year will be the same as the SEV. The Taxable Value will then be “capped” for the second year following the transfer of ownership.

8. What is a principal residence exemption?

If you own and occupy your home as your principal residence, it may be exempt from a portion of local school operating taxes. On your "Notice of Assessment," review your percentage of principal residence exemption. To claim an exemption for the current year, you must own and occupy your home and file a "Pre Affidavit" with your city or township by May 1st of the current year.