With annual assessment notices due in mailboxes around the first week of March, homeowners in Oxford and Addison Townships can generally expect to see small increases in their property values.
Preliminary figures indicate that, on average, the overall assessed value of residential properties will increase this year by 1.3 percent in Oxford and 2.21 percent in Addison.
‘That’s not for each property,? according to Dave Hieber, manager of the Oakland County Equalization Division. ‘Some might go up 5 (percent). Some might go down 2 (percent).?
Of the 52 townships and cities in the county, 32 will experience aggregate increases in assessed values while the other 20 will see theirs go down.
Assessed value is equal to 50 percent of a residential property’s usual selling price, often referred to as the true cash value.
Each tax year, the local assessor determines the assessed value of each parcel of real property based on the condition of the property on Dec. 31 of the previous year. If property values are increasing in a neighborhood, assessed values will likely increase too.
So what does this mean for local tax bills?
Well, that all depends on how Proposal A affects you. ‘It’s case by case,? Hieber said.
Each property is taxed based on its taxable value which is the lesser of the State Equalized Value or capped value. SEV is the assessed value as adjusted following county and state equalization
‘Assessed value and SEV in Oakland County are generally synonymous,? Hieber said.
Under Proposal A, passed by state voters in 1994, a property’s taxable value is capped and can only increase annually by the rate of inflation or 5 percent, whichever is less, unless there is an addition to the property (i.e. physical improvement or omitted property) or the property’s ownership transferred (i.e. sold) during a previous tax year.
When a property is sold, it’s taxable value is reset to equal the SEV. This is commonly referred to as uncapping the taxable value.
Taxable value increases in Michigan this year cannot exceed 3.7 percent, the current rate of inflation set by the state.
‘People that have a spread between their SEV and taxable value could have their market value drop by a few percent and their taxable value actually go up,? Hieber noted.
‘If someone’s been in their house since 1994 or 95, they could have an SEV of $100,000, indicating the house is worth $200,000, but taxable would be capped at something like $60,000,? he explained. ‘In that scenario, your assessment can go up or even down and taxable value would still go up 3.7 percent.?
‘If you’ve lived in the same house since 1994, you’d have to have a substantial drop in property value to not see an increase in your taxable value,? Hieber noted.
If someone purchased a house for $200,000 last year and the assessor set the SEV at $100,000, then the market value dropped to $180,000 this year, the assessed value and SEV would fall to $90,000, less than the previously capped value $100,000.
The new taxable value would therefore be $90,000 and the homeowner would experience a property tax reduction, according to Hieber.
Even though falling residential values don’t appear to be a problem in Oxford and Addison, Hieber said some people might still be confused because they see the average assessed values for the communities going up 1.3 and 2.21 percent while their taxable values are increasing by 3.7 percent as required by Proposal A.
‘There are a lot of people that were in high school when Proposal A passed and now they’re homeowners,? he said. ‘So they might not have a working knowledge (of how Proposal A works).?
‘We’re prepared to see more people at the local board of review time. Even if it’s just trying to clear up the questions with this.?