How to Understand Your Property Tax Assessment

THIS POST HAS BEEN UPDATED IN A MORE RECENT ENTRY. PLEASE CLICK HERE TO VIEW THE NEW BLOG ENTRY -> /2010/02/how-to-understand-your-leelanau-county.html

(Part 1 of 2)

Every year, typically during the last week of February you will be mailed your new notice of assessment informing you of your updated State Equalized Value and Taxable Value. This is sent to all property owners in the Grand Traverse Region.

State Equalized Value (SEV): The dollar value of an asset assigned by a public tax assessor for the purposes of taxation.

SEV x 2 = The Township Assessors total value for your home and/or property.

Taxable Value: The dollar value established for property tax purposes.

Taxable Value x Your Township Millage Rate = 2009 Tax Bill

Why are these numbers different?
-In 1994 Michigan passed Proposal A creating a new standard in which your property tax would be calculated. The taxable value of a property can only increase by the lesser of 5% or the rate of inflation. In recent years inflation has been under 5% so your tax bill would increase yearly by that rate. Property values had continued to soar and appreciate above the rate of inflation. This created a gap between your State Equalized Value (no increase ceiling per year) and your Taxable Value (no more than 5% increase).

Why is my tax bill still increasing during this downturn?
-Today, most appreciation in Leelanau and Grand Traverse Counties have flattened so you won’t see your SEV continue to soar at high percentages from year to year like in the past but there is still that issue of the gap between the two. This is why you will see your tax bill continue to increase every year (by the rate of inflation or 5%, whichever is less) until your Taxable Value = Your State Equalized Value. If we were still paying taxes like before Proposal A, your current taxable value would already equal your SEV (Proposal A has saved you money). The only alternative is appealing and reducing your SEV below your Taxable Value to see any money saving benefit. I will highlight the procedures for this in a later post.


Written by Jonathan Oltersdorf