Property Values and General Assessment Questions
Property values in my neighborhood have been decreasing, will my property valuation be decreasing as well?
Unfortunately, there isn’t a yes or no answer to that question. If you’ve owned your property for a significant amount of time, more than likely your State Equalized Value (SEV) far exceeds your Taxable Value. If this is the case, a decrease in valuation, caused by a slow real estate market, will be reflected in the SEV. The taxable value is required by the Michigan Constitution to increase each year by the rate of inflation or 5%, whichever is lower. In the case of a longtime property owner, the SEV could decrease, while the Taxable Value will continue to increase.
If the SEV decreases, will I pay more or less in property taxes?
Your property taxes are based on the Taxable Value, rather than the SEV. So, in the previous scenario you would pay more in taxes even though your SEV decreased.
Why won't my taxes decrease if my property value is going down?
Proposal A allowed residents to pay property taxes on less than half of their market value by "capping" the Taxable Value, while still allowing the assessor to determine the market value by adjusting the SEV. This has caused, for many long-time property owners, a great disparity between the SEV figure and the Taxable Value figure. The assessor can reduce the SEV to reflect the change in property value, but if the Taxable Value is still well below the SEV, it will keep increasing until the two figures meet. Since property taxes are based on Taxable Value, you end up paying more in taxes.
Will my taxes ever go down?
If a property’s SEV decreases each year, it will eventually meet the Taxable Value. The law states that the Taxable Value can be equal to, but cannot exceed the SEV. So, when this happens, a decrease in SEV will cause decreases in Taxable Value, which in turn lowers your property tax bill. Due to the gap between the SEV and the Taxable Value figures, it would take several years of depressed market conditions to make the SEV and Taxable Value equal. If you happen to be a property owner who purchased a property in the last few years and you have decreasing property value, the SEV and Taxable Value figures could meet sooner than someone who has owned the property for a long period of time.
Why isn't my new assessment 50% of my purchase price?
The simple answer is that it is against the law. MCL 211.27 states that the purchase price is no longer the presumptive True Cash Value of a property. The assessment may be close to 50% of the purchase price but it is determined by investigating the other sales in the area of the property and all of the SEV are set using that sales study.
Can I appeal my assessment, and when?