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Until 1994, property was valued for tax purposes at half its market value. This is called “State Equalized Value” or SEV. In 1994 voters passed Proposal A, which limited the growth of property tax assessments. The formula under Proposal A keeps the taxable value of a property from growing as fast as the SEV. This gap can increase over time. However, in the year following an eligible transfer of ownership, the taxable value is uncapped and is made equal to the SEV, but only for that year following the transfer of ownership.When a parcel is uncapped there could be a substantial increase in the tax depending on the difference between the taxable value and the State Equalized Value of the property.
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Assessed Value is defined by state law as 50% of the market value of the property as of December 31st of the preceding year. Taxable value is derived from a formula created by Proposal A in 1994, designed to limit Taxable value increases at the rate of inflation or 5% whichever is less.
All assessed values are calculated according to State Tax Commission standards. This value is shown as the State Equalized Value or SEV on your tax statement. Assessments are calculated using a mass appraisal technique that takes into account the current cost to replicate your house and then depreciates that cost based on the age of the structure.This number is then adjusted to market value by comparing the depreciated cost of homes that have sold in your area to their sales price. Each year, the Assessor is required by law to analyze sales within economic neighborhoods using a sales study to adjust that neighborhood so that assessed values are at 50% of market value.
The term Taxable Value was used in the 1994 constitutional amendment known as Proposal A to replace SEV in the property tax equation to calculate property tax bills. The first step in the process of determining Taxable Value is to calculate the Capped Value of every parcel of assessable property using the following formula:
Capped Value Formula:
Prior Taxable Value - Taxable Value of Losses x Lesser of 5% or CPI multiplier + Taxable Value of Additions = Capped Value
CPI is the Consumer’s Price Index (Inflation Rate) as calculated by the State of Michigan each fall.
The legislature has defined Taxable Value to be the lesser of SEV or Capped Value. Assessors are required to annually calculate a Capped Value for each individual parcel of real property. The Capped Value is then compared to the SEV of that property, and the lower of the two will be its Taxable Value upon which taxes are levied. The year following an eligible transfer of ownership, the SEV of the transferred property set in that year is its Taxable Value.
The Equalization Timetable
For 2022, the State Tax Commission is allowing a 24-month appraisal study (differs from sales study) to determine the property assessments for all other classes of property (agricultural, commercial, industrial, etc.)
The State Tax Commission has allowed the use of foreclosure sales in the preparation of the assessment rolls. However, these sales must meet a set of standards and requirements established by the STC. The holder of the mortgage, which is usually the seller of the real estate, must provide a Real Property Statement to the local Assessor. These forms are rarely, if ever, submitted and therefore do not appear in the Township sales studies. In addition to the returning of the forms, other conditions must also be met. One of the most important conditions, and most obvious, is that the home must not show any signs of vandalism or excessive deferred maintenance. It should be in approximately the same condition as the surrounding properties. As a result of the STC requirements, very few foreclosure sales are included in the preparation of the Delhi Charter Township assessment rolls.
SEV - As stated in the Equalization timetable for 2022, the time period of the sales study for residential property assessments is from April 1, 2019 through March 31, 2021.
Taxable - Remember, unless there is a transfer of ownership, the definition of Taxable Value is the lesser of the SEV or the Capped Value, which is last year’s Taxable Value (adjusted for physical changes) multiplied by the CPI (=1.033% for 2022).
Since the beginning of Proposal A in 1994, overall increases in SEV have generally been greater than the increase in Taxable Value capped at the CPI. The longer a property has been owned and capped, the greater the gap between the SEV and Taxable Values.
See a Property Assessment Example
By state law, a home’s assessed value is not half its purchased price, but half of its market value.Section 211.27(5) of Michigan Compiled Law states “Beginning December 31, 1994, the purchase price paid in a transfer of property is not the presumptive true cash value of the property transferred. In determining the true cash value of transferred property, an assessing officer shall assess that property using the same valuation method used to value all other property of that same classification in the assessing jurisdiction.”For more information, please view the State Tax Commission’s Bulletin No. 19, 1997 on “Illegal Practices of A: “Following Sales” and B: “Assessing over 50%”.
As mentioned above, there are two distinctly different numbers associated with each property. The SEV represents half the property’s market value and taxable value which is a multiplier in your tax bill. If you have a home that is truly similar to your neighbor’s home your SEV should be about equal to theirs; however, the taxable values would probably not be the same.Since the passage of Proposal A in 1994 the Taxable Value is used to calculate tax bills. Each taxable value will depend on the capped value formula and whether or not there has been a transfer of ownership or a change in the CPI. The taxable value calculation is also subject to any additions and/or losses to the property. SEV and taxable value are not the same and should not be compared when calculating a tax bill.The calculation for your tax bill is as follows: Taxable value times voter approved millage rate equals property tax bill.
There are several factors that affect your tax rate. The reason may be because:
Assessment information on your property is public record, and the Assessor’s Office has some of its data available on the internet. You can access this information free online.You may also obtain assessment information by stopping by our office during normal business hours.
Delhi Charter Township has a reappraisal program in place and we periodically visit every property to update our records. We do this to make sure that our record cards are as reliable as possible and so we can calculate the most accurate assessment possible for you. We encourage you to check to make sure your property information is correct. If you do not have internet access, you can stop by our office.
If there is a difference between what you are telling us and what we have on our record cards, we will be happy to correct your information after our office has verified the item(s) in question. This may include having an Appraiser stop by your property to re-measure or to verify the item(s) in question.
Each year, usually during the last week of February, our office will mail to the owner of record a Notice of Assessment. Unfortunately, this form looks intimidating; however, please read it very closely. This is a very important form and it is our notice to each property owner of record.
How to Read Your Assessment Notice
In general, the Notice of Assessment explains Proposal A of 1994. It also informs the property owner of the current assessed and taxable values and compares these numbers to the prior assessed and taxable values. In addition, this form states the percent of principal residence exemption the property is receiving, the estimate of property tax increase/decrease for the upcoming year, and notes if there was a transfer of ownership.
Please make sure that if you are claiming a Principal Residence Exemption that it is noted on this form. If our records say 0% then you are not receiving your exemption.
Who qualifies for a Principal Residence Exemption?
After checking your records and you disagree with the assessment, you should come in and talk with our office about the valuation of your property. If you are still not satisfied with the valuation and wish to proceed with filing an appeal, you will need to schedule an appointment to appear before the March Board of Review. Please call the Assessing Department at (517) 694-1502 to schedule an appointment.
The March Board of Review has jurisdiction on valuation appeals for the current year only. You may not (by state law) dispute prior year valuation at the March Board of Review. Once the March Board of Review closes its public meeting, the assessment roll is closed and certified. No further changes can be made except those allowed by state law (i.e. clerical error, mutual mistake of fact, or Principal Residence Exemption/Homestead corrections, Michigan Tax Tribunal or State Tax Commission judgments).