Property Taxes - Notice of Assessments

Helpful info for all Michigan property owners! Within the next 1-2 weeks you should receive in the mail (if you haven’t already) your “2023 Notice of Assessment” which has your 2023 property tax information on it. We always get a lot of questions on these notices so hopefully these graphics are helpful! It's especially important to be properly assessed the first year after a property/home purchase, after the first year your taxable value is locked in and can only increase each year by the rate of inflation or 5%, whichever is less.

Michigan House Bill 4753 – Goal is to Prevent Tax Increase on Family Real Estate Transfers

Michigan House Bill 4753 Intends to Prevent Tax Increase on Family Real Estate Transfers

This topic has been updated in a newer post. Please CLICK HERE.

House Bill 4753 sponsored by Rep. Peter Pattalia has passed the Michigan house and has a decent chance of becoming law by the end of the year. As written, the bill would affect transfer of real estate between family members beginning on December 31, 2013. Currently in Michigan when a piece of real estate is transferred to a new owner (including family members), the taxable value generally “uncaps” to the true value of the property. Once you own a piece of real estate the taxable value cannot increase from one year to the next by more than 5% or the rate of inflation, whichever is less, until that real estate is transferred to a new owner. This piece of Legislation would significantly impact many families in the Leelanau County and Grand Traverse County area, especially those families who have had the same piece of real estate for 20+ years. Previously, if you planned on leaving real estate to a family member, the property tax “uncap” might not allow them to afford the new property tax, resulting in them being forced to sell that home/condo/acreage. Conversely, if the bill does pass, the negative impact will be on local governments and school districts which use property tax dollars to help fund their budget, especially in areas with a large amount of family waterfront cottages such as Leelanau County and Traverse City.     

Here is a fictional example:

Suttons Bay waterfront vacation home that has been in the same family since 1972

Current Taxable Value = $125,000 (paying tax on a $250,000 true cash value)
Current Assessed Value = $200,000 ($400,000 true cash value)

-The current owners in this scenario pay non-homestead tax of = ~$4,869 per year.
-Property Transfers under old system “uncaps” the non-homestead tax to = ~$7,791 per year.

Under the MI Bill 4753 the new family member(s) would save almost $3,000 per year!

Keep in mind that a $400,000 waterfront house is the low of the market for many waterfront homes on West Grand Traverse Bay, Suttons Bay, Lake Leelanau, Glen Lake, and Lake Michigan. In some scenarios you could see a $10,000-$20,000 per year difference. Oltersdorf Realty, LLC will be keeping a close eye on this bill.

For Full Documents Click Here:   Bill As Passed By The House
                                                  House Introduced Bill
                                                  Michigan Legislature Page: House Bill 4753

Jonathan Oltersdorf, Oltersdorf Realty, LLC
Phone: 231-271-7777
E-mail: jonathan@oltersdorf.com

Principal Residence Exemption Changes - Senate Bill 349

Principal Residence Exemption Legislation Unanimously Passes Senate

Today, the Michigan Senate voted 38-0 in support of legislation providing a fair process when it comes to their property taxes.

Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years.

Senate Bill 349 now heads over to the House for consideration.

Copyright Michigan Association of REALTORS®. Reprinted with permission.

IF THIS BECOMES LAW WHAT DOES IT MEAN?

Currently, Michigan property owners have to file a principal residence exemption form by May 1 to get lower primary home taxes for the full year. If you miss the May 1 deadline or you purchase a house that wasn't a primary home after May 1 you will pay the higher non homestead taxes until the following year. If this bill becomes law the new deadline for your summer tax bill (the much higher bill) will be June 1 and November 1 for the winter tax bill. In short, it will save the home purchaser money if you buy a non-homestead (vacant or non primary residence) home after May 1 and intend to occupy the home as your primary residence.

Exemptions for bank owned properties.

This also appears to be a major tax break for lending institutions and banks that can file an exemption to receive the homestead property tax rate (primary home rate) for vacant assets that are currently for sale. This also could allow for purchasers to qualify for their mortgage based on the lower tax rate and qualify for a slightly more expensive home.

Here is the most relavent portion of the bill:

An owner of property may claim 1 exemption under this section by filing an affidavit on or before May 1 FOR TAXES LEVIED BEFORE JANUARY 1,2012 OR, FOR TAXES LEVIED AFTER DECEMBER 31, 2011, ON OR BEFORE JUNE 1 FOR THE IMMEDIATELY SUCCEEDING SUMMER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES OR ON OR BEFORE NOVEMBER 1 FOR THE IMMEDIATELY SUCCEEDING WINTER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES

You can read and/or download the full 27 page Senate Bill 349 by clicking here:
http://www.legislature.mi.gov/documents/2011-2012/billengrossed/Senate/pdf/2011-SEBS-0349.pdf

 

UPDATE: APRIL 26, 2012: Yesterday, the Michigan House of Representatives voted 109-1 in support of legislation providing a fair process when it comes to their property taxes. The bill now heads to the Governor, where we expect his signature before May 1st.

UPDATE #2: MAY 1, 2012: PRE Enhancement Legislation Signed by the Governor 5/1/2012 Today, Governor Snyder signed legislation providing homebuyers a fair process when it comes to their property taxes. Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years.

Below are a few FAQ’s regarding the new law:

1. Does the legislation take effect this year?
A. Yes. The new law moves current May 1st PRE filing deadline to June 1st of this year.

2. How does it work?
A. If a homebuyer purchases a Principal Residence and closes on or before June 1st, they can take advantage of a significant tax break by filing for a Principal Residence Exemption.

3. When is the additional filing date?
A. November 1st. This allows for tax relief in those communities that still collect a portion, if not all of their non-homestead mills, on the December tax bill.

4. If my client buys after June 1st this year, what can they expect?
A. If a homebuyer purchases a home after the June 1st filing deadline, and their local tax authority collects all non-homestead mills on the spring tax bill, their property taxes may not reflect the exemption until the next tax bill. If however that local tax authority collects a portion of the non-homestead mills on the winter tax billing cycle, the homebuyer can file for a PRE before the November 1st and exempt themselves from any non-homestead mills collected on the December bill.

5. What about the foreclosure provisions?
A. Banks have the option of maintaining the home’s Principal Residence status by filing a Conditional Rescission. By maintaining this exemption status, it’s the expectation that borrowers will be able to qualify for financing on these foreclosed properties at the PRE rate and begin paying the lower rate of taxation as soon as they move into the home. To make up for the lost school revenue, banks will be assessed a newly defined tax that will keep the 18 mills (which they presently pay on any foreclosed property) when a property can no longer qualify as a principle residence. It is important for those REALTORS® working with bank clients to let lenders know about the change and communicate the benefit of filing a Conditional Rescission.

Copyright Michigan Association of REALTORS®. Reprinted with permission.


If you are planning on buying a home in Leelanau County or Traverse City/Grand Traverse County you should continue to follow this bill as it could potentially become law in the near future.

Jonathan Oltersdorf
Vicky Oltersdorf
Oltersdorf Realty, LLC
Phone: 231-271-7777
E-Mail: realestate@oltersdorf.com

How to Understand Your Leelanau County and Grand Traverse County (Traverse City) Property Tax Assessment

Every year, typically by 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 on your property. This notice is sent to all property owners in Michigan.



Understanding Terminology



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 estimated current market value for your home and/or property.



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



Taxable Value x 2 = The total estimated dollar value for your home and/or property that you will be paying tax on.



Taxable Value x Your Township Millage Rate + Township Administration Fee (1% fee charged in some townships)= Your 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 current tax law allows the taxable value of a property to 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, until recently, had continued to soar and appreciate above the rate of inflation. This created a gap between your State Equalized Value (which has no limit to its increase ceiling per year) and your Taxable Value (which had a max of 5% per year value increase).



Why is my tax bill still increasing during this downturn?

-Today, most home and property values in Leelanau and Grand Traverse Counties have flattened or declined so you should not see your SEV continue to soar at high percentages from year to year like in the past. There still might be a gap between your SEV and Taxable Value (As the local real estate market declines these numbers will become closer in value). 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 your current taxable value is less than your current SEV Proposal A has saved you money! However the taxable value may need to be adjusted to meet current market values. The current law allows upon sale of a property the taxable value of a property to uncap to the current level of the properties SEV. This is why the year after the purchase of a property a new owner must be sure to pay particular attention to this notice!!



How do I reduce my property taxes?

1) Upon receipt of your notice of property assessment from your local Township Assessor in February of each year you should review your properties proposed SEV and Taxable Values. (This notice will be labeled Notice of Assessment- THIS IS NOT A TAX BILL)



2) By multiplying this proposed current year Taxable Value x 2 you will be able to determine the dollar value of the property the local assessor will be basing your current year’s taxes. If your house is worth more than this value then you have no case to reduce your taxes for this year. Conversely, if you feel the proposed Taxable Value of your property X 2 is more than you feel your house is worth you could have a case.



3) By multiplying the proposed current year SEV by 2 you will be able to determine the current dollar (market) value the local assessor has placed on your property.



4) Be sure to check your Homeowners Principal Residence % exemption to be sure it is correct. 100% means you are receiving this exception as your primary home for this calendar year.



5) Every township and/or city has specific times published on this notice and in the local paper (Leelanau Enterprise and Record-Eagle) during early March which is the designated time for you to meet with the township assessor and a local board of review for reviewing your case. At this time you must come prepared with sales data and/or official appraisals of recent sold comparables to your property. These published times in early March are your only opportunity all year to plead your case to reduce your entire years tax bill. If you miss this “Board of Review” you must wait until March of the following year. There are a few exceptions to this rule. The Township Assessor could agree to correct errors on the properties tax card during the year within a specific time frame required by the state.



Official written appraisals by a state licensed appraiser are your best option for obtaining statistical data confirming your properties over assessment. This written appraisal will have a cost associated to its completion with no guarantee that the local board of review will reduce your tax assessment and your bill! If your property is greatly over assessed this cost will be minimal in relation to the savings you may receive if you are successful in obtaining a reduction in your properties tax assessment.



6) Determining your proposed estimated yearly Tax Bill from this notice: By multiplying this Taxable Value times your individual townships mileage (with correct school district) and taking into consideration this properties homestead exemption status you will be able to determine the estimate of your updated tax bill. This amount may vary slightly by townships across Michigan because some townships charge a 1% administration fee for each tax bill.



If there are further questions regarding this issue we suggest you contact your local Township Assessor.



As experienced Realtor professionals at Oltersdorf Realty we do our best to assist our former clients in making sure they are being properly assessed well after we assisted them in purchasing their property or home. This notice is intended to alert all property owners that these notices are very important and must not be ignored despite the statement at the top of the document saying THIS IS NOT A TAX BILL!!!!





Written by:



Vicky Oltersdorf & Jonathan Oltersdorf

Oltersdorf Realty, LLC

231-271-7777

/

RealEstate@Oltersdorf.com





LEELANAU COUNTY MILLAGE RATES









GRAND TRAVERSE COUNTY MILLAGE RATES


(Click HERE to Download)







©This article is copyright protected 2010, protected by Oltersdorf Realty, LLC. ALL RIGHTS RESERVED. Any use of materials on this Web site, including reproduction, modification, distribution or republication, without the prior written consent of Oltersdorf Realty, LLC, is strictly prohibited.




2009 Grand Traverse Millage/Property Tax Rates

THIS POST HAS BEEN UPDATED FOR 2010, THE NEW POST CAN BE FOUND BY CLICKING HERE.

Have you ever wondered what your property taxes would be if you lived in another township, or if you switched your homestead status to your non-primary home? By clicking the photo below you can download a PDF chart of current Grand Traverse County property tax rates (post November 2008 election) along with a description of how to figure your own taxes. I hope this helps!

Click HERE to download.

2009 Leelanau Millage/Property Tax Rates

THIS POST HAS BEEN UPDATED FOR 2010, THE NEW POST CAN BE FOUND BY CLICKING HERE.

Have you ever wondered what your property taxes would be if you lived in another township, or if you switched your homestead status to your non-primary home? By clicking the photo below you can download a PDF chart of current Leelanau County property tax rates (post November 2008 election) along with a description of how to figure your own taxes. I hope this helps!

Click HERE to download.

/

Property Taxes in Michigan

Within the next couple of days you should receive your Notice of Assessment form your Leelanau County or Grand Traverse County Township Assessor, if you haven’t received it already. Please take a moment to download a PDF I have uploaded by clicking HERE. This PDF was created by the Americans for Prosperity Foundation in Michigan and does a great job of explaining your Notice of Assessment and the procedure for having your assessment reduced. The annual Board of Review is your only chance this year to fight your property tax assessment! In Leelanau County there are specific times set up for the public to express their concerns to the board from March 16-19. If you would like to know the specific times for each township please feel free to call our office and we can read them to you.


2009 Michigan Property Tax News

The Michigan State Tax Commission at their meeting on February 2, 2009, made it mandatory for County Equalization Directors to use single year sales studies for 2009 for the residential class of all local units. Directors must now request exceptions to this order and must present compelling evidence to support the use of a two year study.

What does this change mean to me?

When Township Assessors determine the SEV (State Equalized Value) for your home, they are required to base your assessment from a home sale study that they must conduct of comparable sales in your area. Before this mandatory change, they could base your assessment on sales from the previous two years. In a declining market this results in a lag effect as your current assessment could be based on sales from 1-2 years ago when home values were higher than they are today. Assessors are now required to only use sales in the last 12 months, which is intended to provide a SEV closer to real market conditions.

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