Frequently Asked Questions
My tax bills are calculated based on taxable value instead of state equalized value. What does taxable value mean to me?
Taxable values began in 1995 as part of Proposal A. Taxable values are adjusted each year by the Consumer Price Index (CPI) or 5%, whichever is less, until the property title transfers. Taxable value cannot be greater than the state equalized value. In other words, Proposal A "capped" taxable value increases by the CPI or 5%, whichever is less.
Can my taxable value increase more than the rate of inflation?
- A sale and/or title transfer occurs. In the year following a sale and/or title transfer, the property becomes "uncapped" making the state equalized value (SEV) and taxable value the same. Michigan law states that the actual sales price must not be the sole basis for the new SEV for that property.
- New construction to a property which is added to the taxable value.
- The value of items omitted from the previous year(s) assessed value has been added to the taxable value.
If my taxes are now based on taxable value, why is there an assessed value?
The Michigan Constitution requires that all properties be assessed annually at 50% of market value.
How was my assessed value determined?
Local Assessors use a state required mass appraisal method to value properties. They estimate land values from sales data and building values from a state cost manual. Then, they analyze sales data from neighborhoods to develop factors that are uses to further adjust property estimates to reflect the current local market.
I haven't made any improvements to my house. Why did my assessed value change?
Market values can change even when there is no physical change to a property. A growing economy or increasing population can push housing values steadily upward. The local Assessor and the County Equalization Department do not create increases in property value. They recognize changes as they occur and are required to adjust values accordingly.
Why is my change in assessed value different than my neighbor's?
Assessed value changes vary according to the individual characteristics of houses in relation to sales in the area. Building style, size and amenities such as porches, decks, garages, and extra bathrooms affect value estimates.
My assessed value didn't change, but my taxable value increased. Why?
The current sales information for a neighborhood may show no value increase over last year's value. However, the taxable value is tied to the Consumer Price Index and calculated annually, causing an increase in taxable value.
How do I know if my assessed value is reasonable?
Compare the market value of your property with sales of similar homes in your neighborhood. The sales should be on homes that are similar to yours in size, style, age and condition. The local Assessor has sales information to assist you. (Market value = Assessed Value x 2)
I just bought a new house, why isn't my assessed value one half of my sale price?
Michigan law prohibits assessors from basing values on one sale price. The local Assessor is required to value property based on the methods used to value other properties in an area. While it is hoped that value estimate are close to sale prices, they are estimates and they may not be the same as a recent sale.
What if I disagree with the assessed value on my property?
Appeals are heard each year at the local unit's March Board of Review, either by letter or in person. This step preserves appeal rights for further action at Michigan Tax Tribunal.
What is a property transfer affidavit?
Proposal A established the property transfer affidavit. This affidavit must be filed whenever the title of real estate or buildings on leased land is transferred. It must be filed with the local assessor even if there is no deed recorded.
Where do I obtain and file the affidavit?
Property transfer affidavits can be obtained from closing agents, such as a title office, financial institution or attorney. They can also be obtained from the local assessor. The new owner must file the affidavit with the local assessor within 45 days of the transfer.
What is the purpose of the affidavit?
Local Assessor's use the affidavit to make sure that property is assessed properly and receives the correct taxable value.
What is a "transfer of ownership?"
State law defines a "transfer of ownership" as "the conveyance of title to or present interest in property, including the beneficial use of the property." Transfers include deeds, land contracts, and a variety of transactions outlined on the back of the affidavit form.
What happens after the ownership of a property is transferred?
The Michigan Constitution limits how much a property's taxable value can increase while owned by the same person. Once the property is transferred, the assessor must change the taxable value to 50% of the property's usual selling price. In other words, in the year following the sale, the taxable value equals the current state equalized value.
Are certain types of transfers exempt from adjustment?
YES. Exempt transactions include: changes in ownership solely to exclude or include a spouse; transfer of property into a trust where the sole beneficiary is the creator of the trust or that person's spouse; redemption from a tax sale; or a transfer due to a foreclosure. Some of the exempt transactions are listed on the affidavit form and full descriptions are in Michigan Compiled Laws (MCL) Section 211.27a(7)(a-m).
What is the Principal Residence (Homestead) exemption?
State law grants a Principal Residence (Homestead) exemption from local school operating taxes for Principal Residence (Homestead) and Qualified Agricultural properties. Currently that is an 18 mill reduction for the school tax portion of the tax bill.
How do I qualify for the exemption?
To qualify you must own the property and occupy it as your legal, primary residence. The deadline to qualify for any given year is December 31st of that year. Buyers who close and/or occupy the residence after that date are eligible to apply for exemption the following year.
What form do I use?
If this is your first Principal Residence (Homestead) application or you are buying a property that was not previously homesteaded, use the Affidavit for Principal Residence (Homestead) Exemption (form 2368). The Affidavit must be filed each year for a homestead exemption.
What if I stop using my Principal Residence (Homestead) as my primary residence?
If you stop using the exempt property as your principal residence but are not selling it, you are required to file a Request to Rescind Principal Residence (Homestead) Exemption (form 2602). This form must be filed within 90 days of the change. The exemption remains in effect through December 31 of that year.
What if I sell my house and buy a new one?
Once sold, the Principal Residence (Homestead) Exemption on the house sold is no longer held. A homestead exemption must be requested on the new house. Use a Request to Rescind Principal Residence (Homestead) Exemption (form 2602) to rescind the old Principal Residence (Homestead) and the Affidavit for Principal Residence (Homestead) Exemption (form 2368) for the new Principal Residence (Homestead) Exemption. The Michigan Department of Treasury recommends that the forms be completed and distributed by the closing agent who supervises real estate transactions. Principal Residence (Homestead) exemption forms are also available from the local Assessor.
How are my taxes computed?
Taxes are computed by multiplying the taxable value times the total mills. A mill is $1.00 per thousand dollars of taxable value. An easy formula to calculate taxes is shown below:
Principal Residence (Homestead)
Non-Principal Residence (Non-Homestead)
(Remember, a PrincipalResidence (Homestead) is exempt from 18 mills of school operating taxes!)
Why did my taxes increase?
Taxes may increase because:
- The tax rate increased. Periodically, voters have an opportunity to renew or approve increases to tax rates at special elections. If voters approve additional millage, taxes will increase.
- Taxable value increased. Taxable value may have increased because (a) it was adjusted by the annual Consumer Price Index, (b) it was uncapped after property ownership transferred, or (c) new construction or omitted items were added.
Why are my neighbor's taxes less than mine?
Property values are determined individually and differences in style, size, condition and amenities cause differences in taxable value. If you recently purchased a property, the taxable value was uncapped. A neighbor's taxable value may still be capped and less than yours. A lower taxable value means lower taxes.
I'm building a new house. How can I estimate the taxes?
Estimate the annual taxes by multiplying Â½ of the estimated total value of the completed home times the tax rate. Be sure to add land value to the value estimate before computing the estimated taxes.
I don't have any children in school, why do I have to pay school taxes?
Michigan law requires every property owner to support local public schools through property taxes. Eligible homeowners may be exempt for 18 mills of school operating taxes, but are still responsible for school debt, building funds and state education taxes.
My mortgage company raised my house payment because of my taxes. Why did the taxes go up so much?
Typically this happens about one year after buying a new house. The mortgage company probably based the original tax escrow payment on the last known taxes. After a purchase the property taxable value is uncapped for the next tax year. The taxes are then based on a higher value. Once this happens, the mortgage company re-evaluates the escrow amount and changes the payment to cover the actual taxes on the home. They may also increase the payment to make up for any shortfalls from the previous year.
How can I estimate my monthly tax escrow payment?
One way to avoid escrow shortages is to base the tax escrow payment on estimated taxes. Use Â½ of the sale price (if it is a market value sale) times the tax rate to estimate the total taxes. Divide by 12 to get a monthly amount.
How can I find my property lines?
Contact a local surveyor to perform this service. Several are listed in the yellow pages of the phone books. A copy of the tax maps or a plot map can get you started, however survey lines and stakes, if not on your property would only come from a licensed surveyor.
Where do I get a deed prepared for my property?
Contact an attorney for a new deed. If you are familiar with property transactions and are comfortable preparing legal documents by yourself, deed forms are available at most office supply stores.
Where can I get a copy of my deed?
Copies of recorded deeds and land contracts can be obtained from the Arenac County Register of Deeds Office.