How Michigan property taxes work – Taxable value – part 7

So many people are confused on how Michigan property taxes work, the second key is to understand the definition of taxable value.

Taxable value is the most important number on your Metro Detroit property tax statement.  This is the number that determines what you pay on your Michigan property taxes.

When you buy a house the next May the taxable value resets to equal the state equalized value (SEV).   So let’s say you buy a Canton home in Sept 2009.  The current taxable value is 100,000 and the SEV is $150,000.  Currently the taxes are $2000.  So next year at the beginning of May the SEV and taxable value will both become $150,000 (unless the city assessor raises the SEV).  Bottom line is that the State equalized value and taxable value becomes the same number.  So in this example the taxes would go up to $3000 the following year.

So when you look at a property tax statement the main number you want to look at as a homeowner is the TAXABLE VALUE.  That is the number you times by the millage rate to get the Michigan property number you will be paying.

TAXABLE VALUE X MILLAGE RATE = PROPERTY TAX OWED

Then after the first year taxable value resets the taxable value will go up the lesser of 5% or rate of inflation.  But Taxable value can go down if SEV goes down to below taxable value or equal to taxable value.

If you notice the table below you will see that that taxable value never goes up over 5%.  In the years 2005 – 2008 taxable value goes up and the tax amount goes up too.    But in 2009 you see that the taxable value went down because the SEV went down.  The taxes will have gone down too.

 

Assessments & Total Annual Tax
Year Taxable Value State Equalized Value Homestead/ Percent Total
Taxes
2009 119,130.00 119,130.00 100.00
2008 125,580.00 135,380.00 100.00 4,244.87
2007 122,760.00 164,200.00 100.00 4,159.36
2006 118,380.00 164,200.00 100.00 4,035.02
2005 114,600.00 160,980.00 100.00 3,959.63

Whether you are buying Metro Detroit real estate or just trying to understand how Michigan property taxes work I hope this helps you.

 

Russ Ravary your Metro Detroit Real estate serving Oakland, Livingston, and Wayne County real estate

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