Property Tax Info
Ad Valorem Tax - A regular property tax imposed upon property owners for government purposes.
Appeal of Tax Assessment - Appeals are made on a property’s State Equalized Value (SEV), not it’s Taxable Value.
Appraisal - A formal evaluation of property by an expert, used to establish its market value for the purpose of taxation, sale, or securing a mortgage.
Appraiser - A licensed real estate professional who charges a fee for appraising a property to estimate and validate its worth, value, or quality, and has no interest in the property, financial or otherwise, which might affect their estimate of the property’s value.
Assessment - The official appraisal of a property to determine its valuation for the purposes of taxation.
Assessor - A person who is trained to evaluate a property and determine its fair market value for the purpose of calculating property taxes.
Circuit Breaker Law - Any Michigan taxpayer whose taxes are too high for them to afford and who pays more than 3.5 percent of their household income in property taxes is eligible for benefits under the Circuit Breaker Law, form 1040CR filed with state income taxes.
Collection Fee - Property tax administration fees imposed to cover all costs regarding the collection of property taxes, including the costs of assessing property values and in the review and appeal processes.
Comparables - The most recent sales chosen as the most representative or similar to the property that is being appealed in order to estimate the value of that specific property. Comparables are selected by an Assessor or Appraiser.
Cost Approach - A method of appraising property based on depreciation or improvements, plus market value.
Depreciation - For the purpose of taxation, any decrease in the value of a property due to physical deterioration or a decline in price due to market conditions.
Equalization - A process mandated under Michigan’s Constitution that requires that local assessment procedures are uniform across the state. The local assessment values undergo a County Equalization process and this result undergoes a State Equalization process, ultimately transforming the values into the State Equalized Values (SEV).
Historical Sales Data - Collected information regarding homes already sold.
Homestead - Owner-occupied principal residence.
Homestead Exemption Appeal - With some exceptions, under Michigan’s school financing system, homesteads are exempt from local school operating property taxes. To receive an exemption, a homeowner must file an affidavit with the local tax collecting unit by May 1. Once in place this exemption remains until the property is sold or ceases to be a homestead; homeowners need not file each year. If a homeowner fails to file an affidavit on time can appeal to the local board of review in the year for which the exemption is claimed or in the year immediately following.
Homestead Millage Rate - Applies to qualified residential and agricultural properties. Qualified means that you reside in the structure in question. The Homestead Millage Rate is much lower than a non-homestead rate and often represents a tax reduction of more than 33 percent.
Market Value - The estimated amount for which a property should exchange between a willing buyer and seller.
Market Value Approach - What a property would sell for based upon value-in-exchange; often rooted in the state’s ad valorem tax laws.
Michigan Tax Tribunal (MTT) - An administrative tax court with authority over assessment disputes related to property and non-property tax matters. Conduct hearings and render written decisions based on submitted evidence.
Non-Homestead - Property that is not occupied by the owner as their principal residence.
Professional Appraisal - Sometimes called a Fee Appraisal. Conducted by an Appraiser to determine the estimate of a property’s value.
Property Tax Assessment - Based upon a property’s value and historic sales information. Usually a two-year study running from March to March.
Qualified Agricultural Exemption - An exemption for which you can apply if a portion of your property qualifies as agricultural property.
Review Board Hearing - Usually consists of three or four community members who will sit in judgment of your appeal.
Sales Ratio Studies - Analyses of sales data done by the local assessor, county equalization department, and agents of the State Tax Commission. These studies do not compare a handful of similar properties; they use all qualifying market transactions, look for specific variables, and determine the ratio for the aggregate of all properties. The purpose of the sales ratio study is to assure fairness in assessment.
Special Assessment - Can only be levied on land and is designed to recover the cost of improvements that enhance a property. Special Assessments are not property taxes and may not be appealed to the local Board of Review for ad valorem taxes. Procedures for appealing a Special Assessment are limited and can be costly. Unlike property taxes where there are constitutional limits to the amount of time a tax can be levied, some special assessments can be levied forever according to Michigan law.
State Equalized Value (SEV) - A fractional value calculated annually that, according to Michigan’s constitution, mandates that each property must be assessed at one-half of True Cash Value.
State Tax Commission - Comprised of three members appointed by the Governor; maintain general supervision of the administration of the Property Tax Laws in Michigan and assist and give advice to assessors as deemed necessary.
Tax Levy - A legal seizure of your property to satisfy a tax debt.
Taxable Value - The value of the property used to calculate taxes. May be one half of True Cash Value in the beginning, but usually over time factors like inflation cause caps to kick in and the value becomes smaller than the State Equalized Value (SEV). Taxable Value gets reset so it equals the SEV when a property is sold - this causes a new owner to potentially have much higher taxes than the previous owner.
True Cash Value - The selling price of the property that could be obtained at a private sale at the time of assessment. “True cash value” is synonymous with “fair market value.”
Valuation Disclosure - An appraisal or other documentary evidence that a party intends to submit to establish the subject property’s true cash value.