Taxable value 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 property title transfers. Your taxable value cannot be greater than your state equalized value. In other words, Proposal A “capped” taxable value increases by the CPI or 5%, whichever is less.
- 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 the actual sale price must not be the sole basis for the new SEV for that property.
- New construction to a property is added to the taxable value.
- The value of items omitted from the previous year(s) assessed value is added to the taxable value.
The following formula shows how new construction or omitted items are added to the taxable value.
Formula: Previous Taxable Value x CPI + New Construction/Omitted Item = Current Taxable Value
Example: $25,673. x 2.3% ('04 CPI) = $26,263. + $5,500 = $31,763.
The Michigan Constitution still requires all properties to be assessed annually at 50% of market value.
Assessments of each property are reviewed annually. The assessed values are calculated as of tax day each year, which is December 31.
Assessors use a state required mass appraisal method to value properties. We estimate land values from sales data and building values from a state cost manual. Then, we analyze sales data from your neighborhood and develop factors we use to further adjust our estimates to reflect local market value.
Your market value can change even when there is no physical change to your property. A growing economy or increasing population can push housing values steadily upward. The Assessor does not create increases in property value. He/she recognizes changes as they occur and must adjust values accordingly.
Assessed value changes vary according to the individual characteristics of houses in relation to sales in your area. Building style, size and amenities such as porches, decks, garages and extra bathrooms affect value estimates.
The current sales information for your neighborhood may show no value increase over last year’s value. However, the taxable value is tied to the Consumers Price Index and calculated annually causing an increase in your taxable value.
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 Assessor’s Office has sales information to assist you. (Market value = Assessed value X 2)
Michigan law prohibits assessors from basing values on one sale price. We are required to value your property based on the methods used to value other properties in your area. While we hope our value estimate is close to your sale price, it is an estimate and may not be the same as your recent sale.
After gathering the facts about your assessed value, contact the Assessor’s Office to discuss the value. If not satisfied, you may appeal to the March Board of Review and finally the Michigan Tax Tribunal. Proceeding in this order is critical for advancement to the next level. Failure to appeal to the local board of review cancels your right to appeal to the tribunal.
Changes in state law after Proposal A created the Property Transfer Affidavit, (form 2766). An affidavit must be filed whenever title of real estate or buildings on lease land is transferred. It must be filed even if you are not recording a deed. Filing with the local assessor is mandatory.
Property transfer affidavits can be obtained from closing agents such as a title office, financial institution or attorney. They can also be obtained at your local assessor’s office. The new owner must file the affidavit with the local assessor within 45 days of the transfer without penalty. Failure to file could result in a penalty of $5. per day for each day over 45 days not to exceed $200.
Assessors use the affidavit to make sure the property is assessed properly and receives the correct taxable value. The correct taxable value is determined by whether it is a good transfer or an exempt transfer.
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 variety of transactions outlined on the back of the affidavit form.
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 or transfer the taxable value and state equalized value (SEV) are the same. This is called uncapping.
Yes. Some of the exempt transactions include changes in ownership solely to exclude or include a spouse, transferring a 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 transfer to effect a foreclosure. Some of the exempt transactions are listed on the affidavit form and full descriptions are in MCL Section 211.27a(7)(a-m).
Principal Residences are properties that serve as your principal home. State law grants a principal residence exemption from local school operating taxes for a principal residence and qualified agricultural properties. Currently this is a reduction of up to 18 mills of school tax.
To qualify you must own the property and occupy it as your legal, primary residence. The deadline to qualify for any given year is May 1 of that year. Buyers who close and/or occupy the residence after that date are eligible for exemption in the following year.
If this is your first principal residence exemption application or you are buying a property that was not previously a principal residence, you can use the affidavit for Homeowners Principal Residence Exemption (2368).
If you stop using your exempt property as your principal residence but are not selling it, you are required to file a Request to Rescind Homeowners Principal Residence Exemption (2602). This form must be filed within 90 days of the change. The exemption remains in effect through December 31 of that year.
You need to file form (2602) Request to Rescind Homeowners Principal Residence on the house you sold and form (2368) Homeowners Principal Residence Exemption Affidavit for the home you just purchased and moving into. The Michigan Department of Treasury recommends the forms be completed and distributed by the closing agent who supervises real estate transactions. Principal Residence Exemption forms are also available at the Assessor’s Office.
No. In most cases, this attempt to receive a dual benefit can result in full taxes being levied on both properties for all previous years, due and payable immediately, a severe penalty and shock to one’s budget. Dual exemptions are only possible when each spouse lives in a separate home and they file separate income tax returns.
The law allows the July and December Board of Review to grant Principal Residence Exemptions for the current year, plus up to three previous years. If you qualify, there will be a refund for the years eligible. The County Treasurer will send the refund within 30 days of adjournment of the board.
Yes. However, if at some point you declare yourself a Florida resident and/or are spending more than 6 months there, then you may no longer qualify for the Michigan Exemption.
The General Property Tax Act, 211.7u, describes the poverty exemption as; The homestead of persons who, in the judgment of the supervisor and board of review, by reason of poverty, are unable to contribute toward the public charges is eligible for exemption in whole or in part from taxation under this act.
To be considered for this exemption, you must have an income less than or equal to the Federal Guidelines for the Poverty Income Level. You must also satisfy the asset test as established in the City of Owosso, Poverty Policy and Guidelines.
Since the exemption is only granted for one year, you must file annually. Some of the documents required are State and Federal Income Tax Returns, Income and Expense Statements along with documents that support the statements, proof of ownership as your principal residence, Michigan driver’s license or proper identification, and any other data requested on the application that will support the claim.
The summer taxes are billed July 1 of each year and due by August 31 without penalties. The winter taxes are billed December 1 of each year and due by February 14 without penalties. On March 1, the delinquent tax rolls are given to the County Treasurer and additional penalties are added.
Although the taxing agencies on your tax bills may have different fiscal years, your bills are for the calendar year in which they are billed. Add your July and December tax bills together for your total annual taxes.
Taxes are computed by multiplying your 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:
Formula: Taxable Value x Mills / 1,000 = Taxes
Example: 100,000 x 41.50 / 1,000 = $4,150.
Taxes can increase because:
- The tax rate (millage rate) increased. Periodically, voters have an opportunity to renew or approve increases to tax rates at special elections. If voters approve additional millage, your taxes will increase.
- Your taxable value increased. Your 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.
Property values are determined individually and differences in style, size, condition and amenities cause differences in taxable value. If you recently purchased your property, your taxable value may have been uncapped. Your neighbor’s taxable value may still be capped and less than yours. A lower taxable value means lower taxes.
Estimate your annual taxes by multiplying 50% of the value of the new home and land times the tax rate.
Formula: New Home Value + Land Value x 50% = Taxable Value x Tax Rate = Taxes
Example: $120,000. + $25,000. x 50% = $72,500. x .035 = $2,537.50
Michigan law requires everyone to support local public schools through property taxes. Eligible homeowners may be exempt from up to 18 mills of school operating taxes, but are still responsible for school debt, building funds and state education taxes.
Typically this happens about one year after you buy a new house. Your mortgage company probably based your original tax escrow payment on the last known taxes. After you purchased the property it’s taxable value was uncapped for the next tax year. The taxes were then based on a higher value. Once this happens, your mortgage company reevaluated your escrow amounts and changed your payment to cover the actual taxes on your home. They may also increase your payment to make up any shortfalls in the previous year.
One way to avoid escrow shortages is to base your tax escrow payments on estimated taxes. Use ½ of your sale price (if it is a market value sale) times the tax rate to estimate your total taxes. Divide by 12 to get a monthly amount. We can help you estimate your taxes, just call us at (989) 725-0530.
Questions about taxes for the current year should be directed to the City Treasurer at (989) 725-0510. Questions about taxes for previous years or delinquent taxes are to be directed to the Shiawassee County Treasurer at (989) 743-2224.
When trying to locate information on vacant property, you need to come into the Assessor’s Office and let us help you locate the property on a tax map. Identifying addresses of buildings on each side of the vacant lot will be very beneficial. This way you can be sure you’re getting the correct information.
If you need to find your property lines, you should contact a local surveyor to perform this service. We will not make any recommendations of who to hire. We can provide your lot size and a copy of a tax map to get you started, but we cannot survey or locate stakes on your property.
Contact an attorney or a title insurance company for a new deed. If you are familiar with property transactions and feel comfortable preparing legal documents by yourself, deed forms are available at most office supply stores.
Copies of recorded deeds and land contracts can be obtained from the Shiawassee County Register of Deeds Office, 208 N. Shiawassee Street, Corunna, MI, 48817. (989) 743-2216.