March madness? Property owners are receiving new assessments
Early March heralds the coming spring, Daylight Savings Time (it starts Sunday) and the annual mailing of new assessments to property owners.
Those mailings went out starting last week in Ann Arbor, and now communities across Washtenaw County are awaiting final assessment determinations via their respective Boards of Review.
Across Washtenaw County, real property was valued at a total of $14 billion in 2011 — and property owners collectively paid $136 million in taxes.
In Ann Arbor, the average residential assessment is going up 2.1 percent, according to a previous report on AnnArbor.com that also showed how property sales tracked across the county in 2011. Assessments are required by law to represent 50 percent of market value.
Assessment notices also will show a taxable value — a different number, which is the multiplier for the property tax levy. They're often different based on Michigan's Headlee Amendment, which capped how much taxes could climb in a given year.
Are you trying to figure out what your assessment means to you?
Take a look at the webpage of Washtenaw County's Department of Equalization, which offers several places to find more information. And if you want to appeal your assessed value, you can contact your municipality to set up an appointment with the Board of Review.
The city of Ann Arbor is distributing an explanation of the entire process to its residents and suggests that people with questions turn to its website.
Here is that information:
Due to the unforeseen effect of Proposal A, many property owners may be confused about the changes in assessed and taxable value this year. The City of Ann Arbor Assessor explains the factors involved in this sometimes confusing calculation.
Proposal A
In 1994, Proposal A was passed by Michigan voters and was designed to limit the amount property taxes could increase in any given year. The effect was to limit property tax increases by the lesser of the rate of inflation or 5 percent. This held true even in years when there were double-digit property-value increases. This calculation became known as taxable value. Property taxes are calculated by multiplying your taxable value by your Millage rate.
Taxable vs. Assessed Value
Taxable value differs from the assessed value. The assessed value represents 50 percent of the market value of a property. In most cases, the taxable value is simply a mathematical calculation based on the previous year’s taxable value because Proposal A limits the annual increase.
In many areas in Michigan, Proposal A has created a large difference between the assessed value (half the market value) and the taxable value (amount on which a property owner pays taxes). Due to declining market values this difference has recently become smaller for many property owners. Areas that are seeing a decrease in market value will also see a decrease in assessed value.
The Consumer Price Index (CPI) is a measure of inflation and deflation. The CPI for the 2012 taxable value in Michigan is 2.7 percent. A property owner’s taxable value will increase by 2.7 percent unless the property’s assessed value is lower than the taxable value. Properties which have a taxable value that is very close to the assessed value and are located in a declining market may very well see a decline in taxable value and property taxes.
The following two examples are provided to help clarify this confusing calculation. Both examples assume a 2011 market value of $300,000 and a 2012 market value of $275,000 with a 2012 CPI of 2.7 percent.
Example 1
2011 2012
Market Value = $300,000 Market Value = $275,000
Assessed Value = $150,000 Assessed Value = $137,500
Taxable Value = $98,000 Taxable Value = $100,646
Example 2
2011 2012
Market Value = $300,000 Market Value = $275,000
Assessed Value = $150,000 Assessed Value = $137,500
Taxable Value = $145,000 Taxable Value = $137,500
Examples Explained
In example 1, the market value decreased, and the taxable value increased by the CPI 2.7 percent because the taxable value is still less than the assessed value.
In example 2, the market value decreased and the taxable value decreased as the taxable value cannot be higher than the assessed value.
For property owners who have owned their property for a number of years, Proposal A created a smoothing effect on their property taxes. In years with rapidly increasing property values, property owners saw a limited increase in property taxes. As illustrated in Example 1, it also will mean small increases in property taxes in years where property values are stagnant or declining.
Appeals Process
Taxable value is simply a mathematical calculation and typically cannot be appealed. The assessed value is 50 percent of market value and can be appealed if it is believed to be too high. A reduction in a property’s assessed value will not reduce property taxes unless the reduced assessed value falls below the taxable value.
Comments
snapshot
Sat, Mar 10, 2012 : 4:14 a.m.
I think the Ann Arbor assessor purposely keeps properties inflated for increased revenue. I'd like to see annarbor.com do some research on properties that have changed ownership to see if the "uncapped" State Equalized Value was reduced to "market value" without the new owner appealing to the board of review or tax tribunal. It didn't happen with my house and I suspect it doesn't happen with many homes.
5twentytwo
Fri, Mar 9, 2012 : 11:40 a.m.
This is an important article that gets very informative comments. Why is it not on the front page longer? Yet, an article about football players getting 5 stars on recruiting sites are your "Top Stories" for 3 days.
dexterreader
Thu, Mar 8, 2012 : 3:30 p.m.
I live in Dexter township and my assessed value went up by over 11%. Someone out here obviously thinks the recession and "housing crisis" is over.
Stephen Lange Ranzini
Thu, Mar 8, 2012 : 12:12 p.m.
@Paula: How many appeals are still pending in the Michigan Tax Tribunal related to properties in Ann Arbor? It's been my observation that the city's assessor over values many properties & that the Ann Arbor City Board of Review fails to be an effective watch dog protecting the citizens & doesn't reel him in when required. I can't talk publicly about experiences of the bank's customers so I'll relate a story about the bank's own experience. When we bought The Mansion on Washtenaw Avenue to use as our headquarters, we paid $1,700,000 & put $200,000 into renovations. We received an Assessment for about $2,400,000. We had to get an appraisal for our auditors & presented to the appeal board this MAI certified commercial appraisal which concluded that the property was worth $2,000,000. They ignored it two years in a row so while we were too busy & missed the deadline the first year, we hired a lawyer the second year & took them to the Michigan Tax Tribunal, which cost us $16,000 in legal fees. We settled with the city just before our court date for a new assessment that valued the property at about $2,100,000. Based on what I hear from our customers, this is a pretty typical experience, spending $5,000 for an appraisal & $16,000 on legal to reduce your property tax bill to close to what it ought to be. From my point of view the whole point of the effort by the city is to grind you down & make it hard to get a fair assessment. In my opinion, the current board members need to go! I believe that our Mayor, who since he is a Realtor ought to know better, should do a better job making appointments to the Ann Arbor City Board of Review, & the people serving there should be more willing to stand up to the assessor. The point of the board isn't about maximizing the city's revenue but about ensuring that people's property assessments aren't too high or too low, so that they pay the fair amount of tax that they are supposed to pay.
motorcycleminer
Thu, Mar 8, 2012 : 12:10 p.m.
If you live in Nottingham aka OZ ..prince john and his merry minions will always find a way to get their greedy hands deeper into your pocket for less services renendered...unless of course your into bombshelters and art....every time your read about a new " hand out " don't forget the " hand in " ..your pocket that is....
hmmm...
Thu, Mar 8, 2012 : 11:58 a.m.
I wonder by how much the Uof M's property taxes increased? O yeah, they DON"T PAY property taxes, despite owning huge amounts of property in the city and benefiting from city services!....perhaps if they paid their fair share the rest of us would not have large and ever increasing property taxes.
Are you serious?
Thu, Mar 8, 2012 : 3:50 a.m.
The local Board of Review is only the first step in getting your assessment lowered. As many have noted here almost everyone loses at the local level. One would guess they just want to keep the taxes up. That being said your best chance is to appeal the denial to the next lever which I believe is the Tax Tribunal. It is not as scary as it sound. Most appeals that are won are taken to the Tribunal. In some cases the local appraiser will contact the person making the appeal to try and work out a deal. The local appraisers would rather not have to deal with the Tribunal particularly if there are suddenly a lot of appeals. If you take the appeal up a level you should consider paying for an appraisal. Considering the payoff over the years it is a good risk. If you get some relief it will continue to pay off indefinitely. Strangely enough most houses within a few blocks of my area just east of the Stadium bridge actually went down between 10%-18%. Have no idea why. You can check out all assessments in Ann Arbor and most of the county for free at bsasoftware.com Go to the link on the right that says Search Online Property Tax Data. Lots of interesting stuff in there.
larry kramer
Thu, Mar 8, 2012 : 1:51 a.m.
last year I found 6 houses similar to mine in my neighborhood that sold for $50k less than what the city says my house is worth. I presented this info to the appeals board. 3 weeks later, I got a letter saying "appeal denied"--no reason, no justification. I need to appeal again this year, but I have no idea what works. Does anyone out there know how they justify their decisions? How about a formal appraisal by a certified appraiser? Is the appeals board bound by any laws>
rob
Thu, Mar 8, 2012 : 2:44 p.m.
You can appeal to the state if you want. You'll get your decision sometime in 2014.
Richard Wickboldt
Wed, Mar 7, 2012 : 11:57 p.m.
"Isn't a tax increase without a vote a tax without representation" When things got crazy like this back in the 1700s. Some very annoyed and angry people decided they had enough. Took up arms and had a revolution. Maybe there needs to be a revolution in the 2100s. Taxing only real estate owners (if you haven't been exempted somehow) is unfair, unjust; and the way it is done it could be said deceitful. I once had a one to one meeting with the City Assessor in his office to discuss this issue. We had a lengthy, cordial discussion. I got him to give me the detail on how the market value and assessed value is calculated and the methodology. First of all the assessed value is one based upon market value and then an adjustment made by the city assessor's office (95% of properties in an upward direction). This adjustment is really on the whim of some persons interoperation of vague rules. I was told since my house in not plain Jane design like the one next door, but looks like a country French house with brick. I had to be assessed more. Then the market value was based upon surrounding homes which included the next over sub division where homes averaged close to a million each. I asked him if that was fair. He would not answer the question. So maybe it is just time again for a revolution. This time similar to the ones the French had. I think I saw an old dusty guillotine in the Treasure Mart last week.
Linda Peck
Wed, Mar 7, 2012 : 8:48 p.m.
This is the second time I have received a decrease since I have lived here, since 1995. It is good news for me. I wonder about other neighbors, though, and the equity of taxation in the City of Ann Arbor.
mhirzel
Wed, Mar 7, 2012 : 8:14 p.m.
You need one more option on your poll: Assessment went down and taxes went up.
Val
Wed, Mar 7, 2012 : 7:56 p.m.
The assessments have to go up because half of Ann Arbor is not taxed. Isn't a tax increase without a vote a tax without representation? There is no need for a millage request for AATA or the schools. Just have the assessors increase the value of your property as required to meet new budgets. Remember we are renting our homes from the government who can raise your rent just like a landlord. Of course the assessor cannot raise the taxes on people who don't own property. All businesses will have to increase their prices to cover the increase in the property value. We the property owners have very little to say about property taxes as the people who don't own property out number the people who do. Just the UoM students are a huge voting block that don't own property. PROPERTY TAXES ARE EVIL.
Richard Wickboldt
Wed, Mar 7, 2012 : 11:55 p.m.
"Isn't a tax increase without a vote a tax without representation" When things got crazy like thisback in the 1700s. some very annoyed and angry people decided they had enough. Took up arms and had a revolution. Maybe there needs to be a revolution in the 1200s.
Irwin Daniels
Wed, Mar 7, 2012 : 5:51 p.m.
For the last five years our taxes of gone up while my neighbors (about the same size and property) have gone down. Here I go again in front of the appeal board just to get rejected once again - I would love to see their taxes....
PhillyCheeseSteak
Wed, Mar 7, 2012 : 6:34 p.m.
You can see their taxes! (If you live in the City of Ann Arbor.) Just go here: <a href="http://www.a2gov.org/government/financeadminservices/assessor/Pages/OnLineDisclamier.aspx" rel='nofollow'>http://www.a2gov.org/government/financeadminservices/assessor/Pages/OnLineDisclamier.aspx</a>
shutthefrtdoor
Wed, Mar 7, 2012 : 6:03 p.m.
That's GOT to be frustrating...ugh
Chudate
Wed, Mar 7, 2012 : 4:27 p.m.
Mine went up, but not by enough to bother appealing. Not sure I buy it, though.
smokeblwr
Wed, Mar 7, 2012 : 3:55 p.m.
Rick Santorum will fix this. Just you watch.
shutthefrtdoor
Wed, Mar 7, 2012 : 4:54 p.m.
Yep! The values will drop like a rock once again... oh the humanity...LOL
Tracie
Wed, Mar 7, 2012 : 3:13 p.m.
Every year mine goes up by the maximum amount allowed. Every year I fight it and lose. This year it's gone up again!! How can they keep saying my property is increasing in value when homes in my area are sellling for less.
EyeHeartA2
Wed, Mar 7, 2012 : 3:35 p.m.
This is why Prop A happened.
Dog Guy
Wed, Mar 7, 2012 : 2:58 p.m.
Ann Arbor's taxation level means that AAPS and the city own my home and I am paying rent . . . except that their maintenance is nil. This situation explains the super arrogant attitude of the city and school politicos.
Ross
Wed, Mar 7, 2012 : 3:53 p.m.
c'mon, man... settle down. Do you know of other municipalities where you can live tax free, or when they tax you for local schools and general operating expenses, they also come and maintain your own home for you? Get real.
dlaute81
Wed, Mar 7, 2012 : 2:57 p.m.
My Ypsi assessment went down another 10%. The assessed value is officially half of what it was in 2006.
EyeHeartA2
Wed, Mar 7, 2012 : 2:54 p.m.
What a joke. I got my assessement and my house is assessed for about 25K more than any house in our neghborhood has sold for in the last 5 years. This is part of why Prop A happened. The local government bending you over with imaginary assessments, so they can buy more art and empty fields in Dexter.
rob
Thu, Mar 8, 2012 : 2:42 p.m.
The city needs more money to pay for the illusion of safety. You get what you pay for.
shutthefrtdoor
Wed, Mar 7, 2012 : 2:38 p.m.
I'll tell ya! The SEV's are going up A LOT faster than they went down...imagine that!
shutthefrtdoor
Wed, Mar 7, 2012 : 6:02 p.m.
I hear ya cinna...mine still won't sell for what they suggest. It seems like a shell game to me.
cinnabar7071
Wed, Mar 7, 2012 : 5:17 p.m.
Not for me, mine still going down.