Understanding Your Property Assessment and Taxable Value and 1994 Proposal A

Understanding Your Property Assessment and Taxable Value

The Assessor’s Office spends a considerable amount of time analyzing arm’s length property sales that have occurred over a 24-month sale study period as required by the State Tax Commission.  Values are set as of December 31 (tax day) of every year.  The sale study period determined by the State Tax Commission is modified annually.

In February of each year property owners will receive an “Assessment Change Notice” which will include the property identification number and the property class (located in the upper area of the notice.) 

• If you own and occupy the property as your principal residence you may qualify for a “Principal Residence Exemption” PRE.  The status of the property percentage used as a principal residence is also listed in the upper right corner of the Assessment Change Notice. 
• There are line items & columns that list the prior years Taxable Value (TV) and the prior years Assessed Value (AV) along with the current year tentative taxable and assessed values.  The last column indicates the amount of change from the prior year to the current year. 
• The Notice also lists the monetary amount that any change in value will generate for the current tax year and will say if there “was” or “was not” a transfer of ownership” of the property during the previous year.  If there was a transfer of ownership, the Taxable Value (TV) will be “uncapped” and become the same value as the Assessed Value (AV). The property owner should review these important areas for accuracy and contact the assessor’s office with any questions or concerns.

Assessed value (AV) represents 50% of the property’s estimated True Cash Value - not 50% of the sale price.  The Taxable Value (TV) is the lesser of the “Capped Value” or the State Equalized Value (SEV).  To calculate the capped value use the mathematical formula of Capped Value = prior year TV – losses x inflation rate multiplier + additions where losses reflect “construction demolition” and additions reflect “new construction”.  The inflation rate is determined by the State annually and is noted on the “Assessment Change Notice” for the current year.  Municipal millage rates are applied to the current Taxable Value to calculate the current years property tax.  There may also be an administration fee added to the tax bill.

If the property owner disagrees with the Assessed Value on the Notice, they may appeal to the March Board of Review.  The meeting dates and times are listed on the Assessment Change Notice.  The March Board of Review does not have the authority to change Taxable Value unless a reduction is made to the Assessed Value that would affect the Taxable Value.  The July and December Boards or Review do not have the authority to hear valuation appeals.

1994 Proposal A

On March 15, 1994, Michigan voters approved the constitutional amendment known as Proposal A which was designed to limit the growth in property taxes by the Consumer Price Index (CPI) until ownership in the property was transferred. Prior to Proposal A, property taxes were based on the SEV or assessed value of your property. Generally speaking, under the protection of Proposal A, increases in property taxes are limited to the rate of inflation or 5% whichever is less. (It is the taxable value that is impacted by the limited inflation rate.)  Exceptions include transfers of ownership, new or demoed construction, and changes in millage rates. For 2024, the rate of inflation is 5%.