FREQUENTLY ASKED QUESTIONS

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IMPORTANT TERMINOLOGY TO KNOW

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ASSESSED VALUE (AV) =  Represents 50% of the estimated current True Cash Value (Market Value) of the property.  Michigan Legislation requires the Assessed Value to be estimated annually and set between 49-50% of the market value, based on arms-length sales that have occurred over a 2-year period (April 1st of the prior 2 years through March 31st of the immediate prior year). 

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STATE EQUALIZED VALUE (S.E.V.) = Property taxes are not calculated using the S.E.V. Voters passed Proposal A in 1994 creating a "Taxable Value", which is a calculation and limits the property tax growth rate to an average of the consumer price index for a 2-year period (rate of inflation).  

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TAXABLE VALUE (TV) = The Taxable Value is a calculation used to calculate property taxes based on the unit's levied mills and is calculated as follows:  TV = (Prior Year Taxable Value-Losses) * IRM + New Additions  

The interest rate multiplier is the State of Michigan's calculation of a 24-month average of the National Consumer Price Index and may not exceed 5% unless there is a non-exempt transfer of ownership or new/missing improvements.

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TRUE CASH VALUE (TCV) = The value that represents the estimated market value.  The True Cash Value is a combination of the estimated land value and cost of improvements new less depreciation.  True Cash Values are estimated using the Mass Appraisal process.  The Mass Appraisal Process involves a sales study of arms-length transactions of properties that have sold within the previous 2 years (Studies are from April 1-March 31 for the previous 2 years).

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QUESTION/ANSWERS

 

WHY DID MY TAXABLE VALUE INCREASE WHEN NOTHING HAS BEEN DONE TO THE PROPERTY?  

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All properties are subject to the following increase annually:

1.  Taxable Values increase annually by the rate of inflation or 5%, whichever is the lesser of the two.  Taxable Values are 

     calculated using the following formula:  TV = Prior Year Taxable Value - losses x rate of inflation + additions.  

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If a taxable value has increased by more than the rate of inflation one or both of the following may have occurred:

​2.  The property had a transfer of ownership in the previous tax year.

​3.  The property had new construction or improvements previously not described or missing on the tax roll.  50% of the

     estimated true cash value of the estimated cost of the improvements is added to the property taxable value.

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WHY DID MY ASSESSED VALUE INCREASE?

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Assessed Values are mandated by the General Property Tax Act to be re-estimated annually to approximately 50% of the estimated current market values.  Assessed Values increase or decrease annually according to real estate market sales,  building costs, and inflation. 

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Assessed Values represent an estimated 50% of your property's "True Cash Value" or "Market Value".   True Cash Value is the estimated probable selling price (Market Value) if the property were to be sold on the market at the time of Assessment. 

 

Assessed Value increases do not directly increase Taxable Values unless the property had a Transfer of Ownership that did not qualify for a taxable value uncapping exemption, or unless the property had new value or previously omitted property, which was not previously described on the assessment roll. 

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