Property Tax Information
Approved by Michigan Voters in 1994, Proposal A significantly altered Michigan Property Tax Law. Prior to 1995, taxes were calculated on State Equalized Value, which approximates half of market value. Beginning in 1995, taxes were based on a new value: Taxable Value. By law the increase in Taxable Value cannot exceed the lesser of two factors: Consumer Price Index (C.P.I.) or 5%. However, some circumstances will alter that computation, namely: Transfers of ownership, new construction or demolition.
If a transfer of ownership occurred in the previous year then the capped value no longer applies and the State Equalized Value will be the new Taxable Value. We refer to this as an “uncapping of taxable value”. The new purchaser will be subject to a new starting base taxable value. Barring any physical changes to the property (new construction or demolition), the taxable value will again increase at the lesser of the two rates: C.P.I. or 5%. Assessed values, as equalized, are still required to be at 50% of Market Value. Assessments are reviewed and updated annually. Increases in assessment are not subject to any cap or formula.
Every Division of land in Alcona Township that is not in a platted subdivision or site condominium is required to file a land division form with the assessor or zoning administrator. Land division has been the State of Michigan name for the division of parcels since March of 1997 (it was previously known as the Subdivision control act). Parcels divided and sold without an approval are not required to be treated as separate parcels in the assessment roll. A copy of the Parcels Division application can be obtained “here”.
You are a Michigan Resident if Michigan is your permanent home. Your permanent home is the place you intend to return to whenever you go away. A temporary absence from Michigan, such as spending the winter in another state, does not make you a part-year resident.
Michigan law defines principle residence as the one place where a person has his or her true, fixed and permanent home to which, whenever absent he or she intends to return and that shall continue as a principle residence until another principle residence is established. In order to verify a persons claim that a particular property is a principle residence, Treasury will accept various documents including Drivers license, voter registration card, cancelled checks listing the property address, income tax records indicating the mailing address and insurance policies. If a residence no longer qualifies for the Homeowners Principle Residence Exemption, you must file a request to recind form.
The assessed value must reflect 50% of market value. Market Value is a product of the prices paid for multiple properties in a municipality. As the sale prices of properties increase/decrease, so does the market value and assessed value. All property values do not change to the same degree, as some have water frontage or scenic views for example that may increase their value more rapidly than others. Some may have limited access or limited utilities which could affect the value. Homeowners have a responsibility to report any changes made to their property that would affect its value, such as a building destroyed by fire. A building permit is required for all new buildings and the assessor is notified by the building department of these.
The first thing to do is talk to your local assessor about the valuation on your parcel. Check the appraisal records to make sure all the components of the property are correct. Appraisal record cards are considered public records and can be reviewed by calling the assessor. If you wish to proceed at this point, you can appear before the Board of Review which meets during the second week of March each year. The three member Board of Review is set up under the Michigan General Property Tax Law, members recommended by supervisors, and approve by the Township Board at a public meeting. If you are gone from the area and wish to appeal to the Board of Review you may send a personal representative or a letter explaining the reason for appealing (be sure to include the assessed value, parcel number your address and telephone number). The Board of Review will notify you by first class mail of their decision. If you wish to further appeal you may file an appeal with the Michigan Tax Tribunal on or before June 30 of the current year.
In an effort to increase understanding and minimize the impact of confusing figures, we are providing the following for your use as reference concerning how your actual tax bill is calculated. Please remember that millage levels might fluctuate from year to year and season to season depending on current and pending legislation. Please also note that there are dozens of factors that affect arriving at a final assessment figure and that the following example is by no means based on an actual property.
The basic procedure for arriving at an assessment figure is based on actual (comparable) property sales figures within the township for the preceding year. Using an average acreage value combined with attributes such as age, condition, square footage, and class of building(s), amenities, porches, decks, garages, building materials and any other existing improvements are taken into consideration to arrive at a figure that should express what the property is truly worth were it to sell.
By law, the TAXABLE figure must not exceed 50% of a property’s true cash value. For EXAMPLE, let’s say that you own 10 acres of land on which stands a class C home built in 1972 with the basics of septic, well, and electric. If an acre of property is selling for $1000.00, the acreage value would be: 10 acres at $1000.00 each (10 x 1000 = $10,000.00)
Taking into account the 1972 class C home of 1500 sq. ft. with septic, well, and electric would sell for in your area for that year (just as example) $90,000.00. Therefore, your property’s true cash value would be: $10,000.00 + $90,000.00 = $100,000.00.
The TAXABLE figure that is arrived at then would be 50% of the true cash value or $50,000.00 assuming any increase from the previous year is within the limits of the CPI or 5% rule.
Now that we have an assessment figure for the EXAMPLE property, we can plug that number into a formula from which your actual tax bill is derived. The formula is based on mills, which is considered to be $1.00 for each $1,000.00 of taxable value, not true value. If, for the EXAMPLE property, the total levied mills come to 40, the tax rate would be $40.00 per $1000.00 of taxable value.
With this knowledge you can calculate what your actual bill that you will receive in the mail will be. In this instance it would be:
Taxable figure ($50,000.00) / 1000 = 50.
Take this figure and multiply it by your total millage rate, $40
50 X $40.00 = $2000.00.
The EXAMPLE'S actual tax bill is $2000.00.
We hope that this has helped to clarify how your taxes are derived.
To get a reasonably good estimate of your tax liability, you can go to the Michigan Department of Treasury website and use their calculator by clicking here.