Deciphering your Michigan tax bill requires a general understanding of what the value amounts on your property tax bill mean. If you own property in Michigan, you may receive up to three tax bills – county, township and city or village. Normally township and city or village tax bills arrive in the summer, while county bills are mailed in the winter. Your property tax bill includes a taxable value figure, an assessed value figure and a state equalized value figure.
In Michigan, the assessed value is 50 percent of the market value of your property. The taxable value is the assessed value with an adjustment factor applied, to make sure everyone pays a fair rate of taxes.
What Does Taxable Value mean in Michigan?
In Michigan, the taxable value is the figure used to calculate property taxes for the year. When Proposal A passed in March of 1994, it capped the amount the annual taxable value could increase at 5 percent. Assessed value and taxable value are essentially the same amount, initially. However, taxable values are capped, while assessed values are not.
Assessed Value is Half Market Value
The Michigan Constitution says your property’s assessed value can be no more than 50 percent of your home’s true cash value. The Michigan Supreme handed down a ruling in 1954 that made the assessed value of property the figure the local property appraiser places on the real estate. The Michigan Legislature followed this ruling in 1965 with one that set a statewide assessed value at 50 percent of a property’s true cash value.
Your assessor must determine the assessed value of your property based on a three-step process. The property assessor makes an annual assessment of the properties under his jurisdiction based on each individual property’s condition on December 31 of the previous year. Next, your county commissioners apply an adjustment factor to the assessments, equalizing the values to a state-mandated level. The last step involves overview by Lansing’s State Tax Commission, where your county commissioners’ assessments are scrutinized, and, if necessary, additional adjustments made to meet legislative requirements with regard to assessed value.
State Equalized Value
The state equalized value amount was established because, prior to 1981, some taxing authorities did not follow state law, which required uniform assessments. To bring all properties under the requirement, the state established the state equalized value figure as a tentative taxable value. If your Michigan property assesses at 50 percent of the true cash value, no equalization is required.
If your property value increases, the state equalized value could significantly eclipse the taxable value of your home because of the cap created by the passage of 1994’s Proposal A, which created the 5 percent limit. If you purchase a new home, your state equalized value becomes your taxable value in the next taxable year.
Board of Review
If you disagree with your tax assessment, you have the opportunity to challenge the figure at an annual board of review. Board of review is established under Michigan tax law, which sets the number of board members as well as the date and hours of board reviews. Cities and townships must hold reviews at the assigned times. You can challenge the assessed value, the taxable value or the assessment classification of your property. You must appeal at the local level to have a chance to appeal at the state level if your local appeal is denied.
Cheryl Withrow is a writer in Michigan’s untamed Upper Peninsula. Following a teaching career she served alternately as editor of the "Washington County News" and the "Geneva County Reaper," and as associate editor of "Bay Life" magazine. Withrow holds a Bachelor of Science in business with a major in accountancy from Wright State University and a Bachelor of Arts in English from Ohio University.