Property Tax Assessment

[lovemylife]

I was just wondering if you could help me out.
My DH and I just purchased this house last April and today I received a Tax Assessment in the mail. I was wondering how that works for my property taxes and if the taxable value is higher than the assessed value when we bought the house, if there is anything we can do about that.

This is what is shows:
Taxable Value 2011:$39505 2012: $56600 Change 17095
Assessed Value 2011:58700 2012: $56600 Change -2100

Am I looking at higher property taxes or what does this mean?

TIA

 

[magiclj]

I was just wondering if you could help me out.
My DH and I just purchased this house last April and today I received a Tax Assessment in the mail. I was wondering how that works for my property taxes and if the taxable value is higher than the assessed value when we bought the house, if there is anything we can do about that.

This is what is shows:
Taxable Value 2011:$39505 2012: $56600 Change 17095
Assessed Value 2011:58700 2012: $56600 Change -2100

Am I looking at higher property taxes or what does this mean?

TIA

The taxable value of your home increased, so yes the taxes will go up. Last year your taxes were based on the value of $39,505, multiply this by the tax rate for your community and that would have been last year taxes. This year your taxes will by based on the value of $56,600 times the tax rate.

The home had an assessed value of $58,700 last year meaning they felt the true cash value for the home to be $117,400 (58,700x2). This year they say the true cash value of your home is $113,200 (56,600x2). This figure does not effect the taxes on your home.

Now if you bought it for less than that and it was not a bank foreclosure sale you can appeal it at the board of review (even if it was a foreclosure you can try to appeal the increase). You would need to contact the city or township Assessor's office to schedule an appointment. It is very easy to appeal and takes 10-15 minutes. If you have an appraisal showing the value of the home to be less that would be good to show them.

One thing to make sure if you live in the house as your primary residence is that you have the homestead property tax exemption. This form should have been filed at the time of purchase in your closing papers - just make sure they have it. On non-homestead properties in the state of Michigan an extra 18 mills is assessed for school taxes.

I hope this was explained clearly for you.

( I work for a local municipality in the tax dept - close to the Assessing dept.)

 

[marius97]

Another Michiganian here. We ran into this when we bought our first nice home too. The taxable value can only go up a certain amount each year (inflation rate?). For a long time the value of houses rose faster than the inflation rate. This was good for the home owner. When the home was sold, the taxable value resets to the actual taxable value. From that point it can rise no more than the inflation rate. We went in looking at the taxable value of our new house and budgeted that way. Problem was that the previous owners had the house for 20 years. Our taxable value more than doubled. Ouch.

 

[seashoreCM]

If the assessed value goes up then the number of dollars of property tax you pay may or may not go up.

There is also the tax rate, typically expressed as number of dollars of property tax per $1000. of value. If your assessment goes up and the city tax rate goes down, then your property tax could stay the same or even decrease.

The assessed value (determined by the city and used by the tax collector) usually is not the same as the appraised value (determined by a private appraiser and used by the mortgage company or bank and a better indication of what the house would sell for)

I have not heard of the term "taxable value" but in some states you multiply the assessed value by another number called the assessment ratio (for example 0.70, yields the taxable value?) and then you multiply ths by the tax rate to get the amount of tax due. Many states use 100% assessment which means there is no assessment ratio, you multiply the assessment by the tax rate only.

 

[ekatiel]

Did you pay less than the new taxable value for your home when you bought it last April? If so, you can probably protest the value on the grounds that the "fair market value" of the house was XXX amount b/c that's what you paid for it. We protested ours last year because we had purchased the house for about $15K less than what they said the value was. Good luck. --Katie

 

[lovemylife]

Thanks for all of your insights. It looks like I will be paying more. It looks like our mileage? is .55/$1000. If that is correct, I am looking at another $980/yr or $80/mo. That really sucks.

 

[starry_solo]

Maybe it's Michigan, but your numbers look odd (taxable value vs. assessed value). Here in CA, it's pretty much the same, minus $7000 for the homeowner's exemption.

Did you also receive a supplemental tax bill from the assessor? That's something we get too so you might want to look into that.

 

[magiclj]

Thanks for all of your insights. It looks like I will be paying more. It looks like our mileage? is .55/$1000. If that is correct, I am looking at another $980/yr or $80/mo. That really sucks.

$55 seems high. That is our milage rate for NON homestead property. Is this your primary home?? Make sure you have the homestead papers filed with the Assessor's office if it is your primary residence. The milage rate for homestead is 18 mills lower.

 

[North of Mouse]

Wow, we have to be in the poverty level here to get homestead exemption. Our assessed value is what we pay our taxes on, and it's more than our house is worth on today's market. They did assessments here right as the economy was tanking, and they won't do it again for several year which really is not fair at all. I "wish" we could sell ours for the assessed value . Guess every state is different. I'm from LA and you have homestead exemption there and don't pay ANY property taxes

 

[lovemylife]

OP here again.

This is a dumb question, but what is a Homestead Exemption? What papers do you need for that? Is that done when you close on the house?

At the bottom of the letter, it says:
"% exempt as "Homeowners Principal Residence": 100.000

Does this mean the papers were filed for Homestead exemption?
Thanks for all of your help since we are kind of clueless on this.

 

[magiclj]

OP here again.

This is a dumb question, but what is a Homestead Exemption? What papers do you need for that? Is that done when you close on the house?

At the bottom of the letter, it says:
"% exempt as "Homeowners Principal Residence": 100.000

Does this mean the papers were filed for Homestead exemption?
Thanks for all of your help since we are kind of clueless on this.

A homestead exemption is a break in the tax rate to the owner occupied - home owner. This is your primary or only residence. Business and people who own multiple homes pay an additional 18 mills. Someone who owned a home in one community and a cottage for the summer would only get the lower tax rate on the one they claim as their primary residence. I think the law passed back in 1994. People were complaining they were being taxed out of their own homes and this was a break the Michigan lawmakers came up with, but only on your primary residence.

Yes - you have the 100% homestead rate. I would call the Assessor's or Treasurer's Office and ask them what the mileage rate is for a homestead property. (trust me - they won't mind - we get this call a lot. We really want a new homeowner to understand their taxes).

As I said before, the $55 mileage seems high, but I don't know your community's rate. Ours is $55 for NON homestead and 37 for homestead. (According to the callers we get - they claim we are higher than any one in Michigan.) We are in a city and I do know the township rates are lower since they do not have a full police and fire department.

Our notices have not gone out yet - so I know you are not in my City.

 

[eolian]

*nevermind*

 

[seashoreCM]

You would appeal the assessment if that is more than what your property can be expected to sell for (fair market value). You would have to "prove" your case by identifying comparable property that sold for less, or by hiring a (private) appraiser.

Usually the assessment is less than the fair market value.

Usually you would not get an abatement just because you paid less than the assessed value for your house. But someone else appealing his assessment could use your purchase price along with others to make his case.

 

[magiclj]

Basically, your taxing authority is changing the equalization rate to 100%. They will most likely be adjusting their tax rates down to reflect this (so if your equalization rate went from 50% to 100% then they would cut the tax rate per thousand in half in order to collect the same amount of taxes). Only your town/taxing authority can tell you this. Your assessment actually went down $2100, so if they aren't increasing taxes you will probably not see an increase. Our town recently went through a change like this and the tax bills stayed very similar so it isn't a guarantee your taxes are going up, but at least your assessed value is the same as tax value and it is easier for the tax office to explain things to everyone. As for the tax office, they only care about the assessed value. If at any time you feel that the assessed value is more than your house is worth there are ways to grieve it, usually once a year, and there is pretty much no back tracking once the deadline is passed to grieve previous years.

Not to be rude, but this is Michigan not New York. Each state handles their assessing differently. In Michigan the taxes are based on the TAXABLE VALUE. This value increased - her taxes will increase!

Please call your Assessor's office to find out the amount of the increase.

Do not be misled by the out of states posts, although I know they are trying to be helpful. Even after working for the City for 25 years, I would certainly not try to even guess at the rules/regulations in other states. Michigan laws/assessing rules are ours alone.