What is the difference between taxable value vs assessed value in Michigan?
When people relocate to the Ann Arbor Area this is one question I am always asked about. Over the last few years, the market values of homes in the Ann Arbor has increased due to the recovering economy.
In Michigan your property taxes are NOT based on the assessed value but on the taxable value. The taxable value is limited by state law as to how much they can change. In 1994, the voters of Michigan passed a Constitutional Amendment, often referred to commonly by “Proposal A”. Prior to 1994 property taxes WERE based on the assessed value.
Now the taxable value increases are limited to 5% or the rate of inflation OR whatever is less.
Here is the formula:
(2015 Taxable Value-Losses) X 1.003 (2016 CPI) + New = 2016 Taxable (Capped) Value
The annual inflation rate multiple or (IRM) for the State of Michigan was determined to be .3% and is applied to every property in the entire State of Michigan.
Your local assessing office (click on the link) is always available to answer any questions you have.
When you move to the Ann Arbor area the assessed value and taxable value will be the same. In the second year the taxable value will be “capped” for the second year following the change of ownership.
The sale price of an individual property does not necessarily determine its market value and property is not assessed at 50% of a sale price. The SEV is based on 50% of market value of your home as required by state law. Although numerous factors are considered by the Assessor’s Office in arriving at the initial market value of a property, increases in market value from year to year are attributable to increased sale prices of properties in an assessing neighborhood as well as additions, remodeling, etc.
Contact any of us at Savvy Realty Group, 734-926-9797.