What is the difference between SEV and Taxable value when talking about how Michigan property taxes?
SEV stands for State Equalized Value. The local city assessor or township assessor determines a value of your property. Some say it is the market value or cash value of the property. State Equalized Value (SEV) is 50% of the cash value. The assessor always determines this figure. They have their own formula that they go by and it does not necessarily mean that you can sell your house for that price.
Taxable Value is the second number you will see on your tax bill. It is a little tougher to explain, (and it is a little complicated). Taxable value can also be called the capped value.
When you buy a home the taxable value and the SEV are both reset to the same number. The taxable value becomes the same number the State Equalized value is. That is why sometimes your Michigan property taxes jump when you buy a home. After the first year you own the house the taxable value can change. The normal rule is that the Taxable Value can rise the percentage of change in the rate of inflation or 5%, whichever is lesser. In this market both the taxable value and the state equalize value have been falling. So they have been the same.
Below is an example of a person who has owned the home for a long time. If you notice in 2005 there was a wide spread between the taxable value and theSEV. That is because over the years SEV reflects the market value of the property (as determined by the city assessor) where the taxable value is capped. Taxable values can only rise so fast. Remember Taxable value can only rise the rate of inflation or 5% which is less. So the SEV usually rises much faster. As you can see in the example below the taxable value is 114,600 and the state equalized value is 160,980. These people had owned the property since 1988. But from that point on you will notice that home values stalled and then starting falling. Now you will notice that State Equalized Value and Taxable Value are now equal.
Taxable Value State Equalized Homestead Taxes
I hope this helps explain how Michigan property taxes work. Always feel to email me or call me with questions.
How Michigan property taxes work- homestead taxes and non-homestead taxes - part 1
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