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1. What is market value?

Finding the market value of your property involves discovering the price most people would pay for it in its present condition. It's not quite that simple, however, because the assessor has to find what this value would be for every property, no matter how big or small. But the assessor's job doesn't stop there. Each year it has to be done all over again because the market value of almost everything changes from one year to the next-as we all know.

2. Why have a property tax?

Properties are appraised so that those of us who want the advantages of having schools, fire and police protection, and other public benefits (which means just about all of us), can absorb our fair share of the cost, in proportion to the amount of money our individual properties are worth. The property tax is part of a well-balanced revenue system. It is a more stable source of money than sales and income taxes because it does not fluctuate when communities have recessions. When the community spends your tax dollars on better schools, parks, and so on, your property values rise. Some of the windfall benefits you receive are recaptured by the property tax

3. How is property appraised?

To find the value of any piece of property the assessor must first know what properties similar to it are selling for, what it would cost today to replace it, how much it takes to operate and keep it in repair, what rent it may earn, and many other dollar facts affecting its value, such as the current rate of interest charged for borrowing the money to buy or build properties like yours. Using these facts, the assessor can then go about finding the property's value in three different ways.

• Sales comparison approach: The first method compares your property to others that have sold recently. These prices, however, must be analyzed very carefully to get the true picture. One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price. Another may have sold for less money than it was actually worth because the owner needed cash right away. The property was sold to the first person who made an offer. When using the sales comparison approach, the assessor must always consider such overpricing or under pricing and analyze many sales to arrive at a fair valuation of your property. Size, quality, condition, location, and time of sale are also important factors to consider.
• Cost approach: A second way to value your property is based on how much money it would take, at current material and labor costs, to replace your property with one similar. If your property is not new, the assessor must also determine how much it has depreciated. In addition, the assessor must estimate how much a lot like yours would be worth if vacant.
• Income approach: The third way is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a factory. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property.

4. Why do assessed values change from year to year?

When market value changes, naturally so does assessed value. For instance, if you were to add a garage to your home, the assessed value would increase. However, If your property is in poor repair, the assessed value would decrease. The assessor has not created the value. People Make Value by their transactions in the marketplace. The assessor simply has the legal responsibility to study those transactions and appraise your property accordingly

5. What are your rights and responsibilities?

If your opinion of the value of your property differs from the assessor's, by all means go to the office and discuss the matter. Staff will be glad to answer your questions about the appraisal and explain how to appeal if you cannot come to an agreement. The assessor's office relies on the property owner for information. You can help by providing accurate information. If you feel taxes are too high, you should make your opinion known to the proper taxing authorities. Ask about your eligibility for special exemptions.

6. What happens to taxable value when a property transfers ownership?

(If you just bought your home, you want to read this!)

In the year following the purchase of a property, the Taxable Value becomes equal to the Assessed Value. This is commonly referred to as “uncapping.” In the second year after a property is purchased, the Taxable Value is again capped, and may only increase by the Inflation Rate Multiplier (IRM) or 5%, whichever is less, provided there is no new construction or losses. In Michigan, taxes are based on Taxable Value. Taxable Value can never be greater than the Assessed Value.

When a property transfers ownership, the taxable value uncaps to the current assessed value.  This is one (1) of the impacts of Proposal A of 1994 that the voters of Michigan passed.  For an example:

2021 Taxable Value            105,000

2021 Assessed Value         150,000

Date of sale 07/01/2021

2022 Taxable Value            150,000

2022 Assessed Value         150,000

 This is a STATE law and the local government or board of review have no authority to change this impact.

 Link to bulletin 15 of 2021:

https://www.michigan.gov/documents/treasury/Bulletin_15_of_2021_-_Inflation_Rate_Multiplier_for_2022_741490_7.pdf

Link to bulletin 17 of 2021:

 https://www.michigan.gov/documents/treasury/Bulletin_17_of_2021_-_Procedural_Changes_for_2022_741497_7.pdf

Unfortunately, Proposal A is typically no longer stressed to new buyers during the process of buying property in Michigan.  The officials at the Township are not aware of a transfer until after it occurs and become responsible for educating the new buyer.

 

7. What is a conditional rescission?

An owner may keep the Principle Residence Exemption on the previous principal residence for up to three years if that property is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose and the owner has filed a Principal Residence Exemption on another home in Michigan. 

To apply for a conditional rescission, the owner must submit a Conditional Rescission of Principal Residence Exemption (PRE) (Form 4640) (PDF) to the assessor in which the property is located on or before June 1st or November 1st of the first year of the claim. The exemption has to be renewed by filing a new form in each of the succeeding 2 years.

8. How do I read an Assessment?

How to read your Assessment Change Notice