Why did I not receive my Principal Residence Exemption?
You must own and occupy your property by May 1st of the year that you filed. Also, you need to file the appropriate affidavit with the assessing office in order to receive your exemption. If you moved into your property after May 1st, you do not qualify for the exemption for that year. You will qualify the next year. Did you split or combine your parcel? If so, you need to file a new affidavit with the new property identification numbers. Please contact our office. For additional guidelines on the PRE exemption, click HERE.
I farm my property, why didn’t I get the exemption?
If your property is not automatically classified as 101-Agricultural, you must file a form to receive your exemption. This form is located on our “forms” section of this website. Keep in mind, the requirement is that you are actively farming 50% of your property. Also, you can click HERE for additional guidelines and information regarding the agricultural exemption.
My assessment decreased, so why did my taxable value (or taxes) go up?
Your assessment is designed to reflect 50% of the market value of your home. However, your taxable value is established by formula, and you pay taxes based on this taxable value. The taxable value is calculated by starting with your previous taxable value, subtracting any losses to the property (i.e. building removed), adding the rate of inflation, adding new construction, to arrive at a maximum taxable value. If this value is less than your assessment, then it becomes your new tax base. For example, if your assessment was $50,000 and it was decreased to $45,000 but your taxable value was $30,000; your taxable value would increase by the rate of inflation when your assessment decreased by $5,000.
I read an article that said assessments were decreasing by 20% in the area or State, why didn’t mine?
Basically, the information in the article contains averages of assessments throughout a region. While those averages may be correct, the regional average is not specific enough to a local Township, City or area market. For instance, 80 acre parcels might be decreasing in value, while, properties on a near lake are stable. Across the region, it may be fair to say that values are decreasing by an average of 20%; but in reality, some parcels didn’t decrease, some increased, and some did decrease, all by varying percentages. It is very dependent on the type of property you own, the location, the size, the amenities, and the demand for those properties.
My assessment on my property downstate decreased, but my property up-north didn’t?
The market in south Michigan is very different than the market in northern Michigan. As said above, real estate is dependent on the area in which it is located.
How is my assessment calculated?
It is calculated under the guidelines and rules of the State of Michigan. For a quick summary, your assessment is based on sales in the local area and average building values and land values are extracted to estimate the value of your property. Of course, this is a mass-appraisal method and many properties are valued on averages and your assessment is not “property address” specific. To give a quick overview, let’s take a lake property. In northern Michigan, we have many different properties in shape and size, amenities, and styles of homes. On a lake, we can have four properties, side by side, which one having 100’ on 0.5 acres; one with 200’ on 1 acre and one with 250’ on 40 acres; all within a stone throw. Plus, the buildings on each of the properties are very different from an old cottage to a new 2,500 sq. ft. home. So, when we have sales on the lake, we have to try to extract how much was paid for and apply the information uniformly to all of the other parcels on the lake. As you can see, if all of the homes and lots were the same, it would be easy to take 4 sales on the lake of 150 parcels to come up with values. Unfortunately, in our area, this is not the case. We will have 4 sales on the lake with 150 parcels, but those four sales can be very different from one another.
Why did my taxes go up so much? Why did they double?
This could be a number of reasons. However, one reason that we receive this question frequently is because your property became uncapped following a transfer of ownership. See the next Q&A for what that is specifically.
Was my property “uncapped”?
Uncapping is when the taxable value is “reset” to your assessment the year following a transfer of ownership. For many taxpayers, this happens the year after you purchase a property. The State of Michigan has a great Q&A for all of the circumstances surrounding a transfer of ownership. Click HERE – Transfer of Ownership Q&A
Why are my taxes higher/different than my neighbor?
This is because your taxes are paid based on your taxable value. As explained in an earlier FAQ, your taxable value is set by formula. The issue is, your neighbor’s formula and yours are different. This is the same issue throughout the State of Michigan. There are many factors that go into this formula, such as the length of ownership, the market fluctuation, and any new construction, to name a few which could cause your taxable value to be much different than your neighbors. It is not uncommon to have nearly identical properties, side by side, and one person’s taxes to be $500 per year and the other $1800 per year. You also must consider if one is living on the property, which is a further different in taxes paid. A good tip is, when you are comparing different properties in the same Township for uniformity, looks at the assessed value and not the taxable value. The taxable values are not uniform.
Are foreclosures sales considered in my assessment?
The State Tax Commission allows the use of foreclosure sales to value your property; however, they must meet a set of standards. Foreclosure properties can experience very short exposure to the market, vandalism, neglect, and many other factors what would make it a bad comparison for market value. If the property was in marketable/presentable condition, similar to your property, and exposed to the real estate market for the appropriate amount of time (sometimes the average time on market can be well over one year), the sale can be used as a comparable property.
I just bought my home for $120,000. Shouldn’t my assessment be 50% or $60,000?
By law, your assessment is not calculated based on 50% of your purchase price. The State of Michigan has legislation and policy that covers this mandate. Specifically, the language states that your purchase price paid, after 1994, shall not be assumed to be the market value of that property. Basically, this means that the purchase price MAY be the market value, but it is not by default. This is why additional evidence is needed to show the Board of Review that the purchase price was a fair price. Generally, additional sales information of comparable properties will show that the price was reasonable and reflective of the market. At the assessor level, it is illegal to set the assessment at 50% of the purchase price. The assessor MUST assess all properties in a neighborhood uniformly.
What is the appeal process?
First, the assessing office arrives at a mass-appraisal of your property. If you don’t believe that your proposed assessment accurately reflects 50% of your market value, then you need to file an appeal with the March Board of Review.