Property Tax Appeals in Michigan

Taxable Value and the Applicable Mileage Rates Determines Tax

The assessed value (AV) is the starting assessment based on the purchase price or the uncapped value subject to the county and state equalization of the properties currently on the tax rolls.

The true cash value (TCV) is the estimated fair market value of the property based on current property values in that particular area.

The state equalized value (SEV) is the 50% of the assessed value intended to represent 50% of the true market value of the property.

The taxable value (TV) is the value used to calculate the current property taxes for the property adjusted for inflation (no higher than 5% per year) and changed if the property is uncapped because of a sale, improvement, or other change in ownership.

The taxable value is the key point in determining whether the property is over taxed by that particular municipality. A Board of Review for each municipality generally meets in the first week of March of every year to consider applications for tax changes made by residents. It is necessary to file an application/petition to the Board of Review to have the opportunity to challenge the tax assessment with the Michigan Tax Tribunal.

Often times, the SEV of the property exceeds the taxable value (TCV) because the property may have been purchased long ago and the adjusts per the inflation rate have not caught up with the current increase in the fair market value of the property.

The Property tax is calculated on $1.00 for each $1,000.00 of taxable value. The total mileage depends on the mileage rate for that jurisdiction’s mileage rate. Different mileage rates apply to different jurisdictions. The jurisdiction is usually considered where the property located in which municipality e.g. City of Livonia or City of Plymouth. Below is a sample example:

Prior year taxable value: $120,000.
Current SEV $200,000
Inflation rate 3%
No improvements 0
Mileage rate 40 mills
Total tax: $120,000 X 1.03 = $123,600.
Property tax $123,600 X .40 = $4,944.00.

Often times, there are disagreements between the residents and the assessor as to the taxable value of the property. This does often arise when the property is “uncapped” for tax purposes from a sale. Michigan Law allows this uncapping if the property is sold or if there are improvements to the property which are not considered repairs.

The “uncapped value” should not exceed the fair market value or true cash value of the property in that particular market at that time. Generally, the fair market value is the price a willing buyer pays a willing seller for the property.

Later will shall discuss the difference between the “homestead exemption” and the other “non-homestead exemptions” in Michigan including the taxable values for rental properties and various classifications of property for tax purposes.

Somewhat later, we shall discuss “home improvements” versus ordinarily repairs and how each may affect the property taxes for a property.

Should you need assistance with your property taxes and feel the jurisdiction or municipality is out of line with their assessments we would be happy to help.