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Proposal A
A change brought by Proposal A is the requirement to file a Property Transfer Affidavit with the local assessor when a property transfers ownership. Closing agents (attorneys, real estate offices, title companies, etc.) have these forms and will provide them to you at closing. The Township has blank forms that can be found on the Assessing page. Be sure to file these with the Assessor within 45 days to avoid a penalty. After you complete the form you can mail it, bring it to our office at 205 N John St. Highland MI 48357 or email to
Why does the assessed value change from year to year?
The assessed value must reflect 50% of market value. As market values change, so does your assessment. For instance, if you add a garage to your home, the assessed value would increase.
However, should your property be permanently damaged by fire, the assessed value would decrease. Property owners have a responsibility for reporting any changes to their property that would affect values. If you obtained a building permit, our office will be notified by the Building Inspector's Office.
Changes in Taxes after the Purchase of a new home or property
The purchase of your home may not greatly affect the assessed value of your new property (contrary to popular opinion). The Assessor may not come out and reassess your property after they find out that a transfer has taken place, and your property’s assessed value most likely WILL NOT automatically become 50% of what you paid for your property. What will happen, however, is still somewhat of a shock for some who are not aware of Proposal A.
Section 211.27 a of the Michigan Compiled Law states: “Upon transfer of ownership of property after 1994, the property’s taxable value for the calendar year following the year of the transfer is the property’s assessed value of the calendar year following the transfer.”
What this means to you is that if you purchase your property this year, with a current assessed value of $53,400, and a taxable value of $48,200, in the year following the transfer you will be paying taxes on the new assessed value, which will include the market adjustment.
That new assessed value will serve as your base for all of the future adjustments on both your assessed and taxable values.
It becomes a matter of “buyer beware,” as on several occasions most buyers are not made aware by anyone in their sales transaction that this is going to happen.
Most find themselves in difficult positions when they were led to believe that their property taxes were going to be a far less amount than the amount they are actually billed. This is a process that is mandated by the State Tax Commission. Assessors must abide by these regulations.
What is a Principal Residence Exemption Affidavit (Homestead Exemption)?
This affidavit allows you to claim an exemption of 18 mills on your school property taxes. For your homestead to be eligible, you must OWN AND OCCUPY it as your legal principal residence on or before May 1st of each year. You may claim an exemption for only ONE principal residence and for eligible agricultural property. All principal residence affidavits are ultimately filled with the State Tax Commission, who then verifies that each property owner is in fact only claiming one Principal Residence Exemption.
Here’s an example of what your taxes would be on a property with $50,000 taxable value which did not claim a principal residence exemption, compared to the same property WITHOUT and WITH a principal residence exemption. Based on 2017 millage rates and not including Special Assessments
Without Principal residence exemption |
|
With Principal residence exemption |
$50,000 Taxable Value |
|
$50,000 Taxable Value |
x 48.4452 Millage Rate |
|
x 30.7734 Millage Rate |
$2,422.26 Taxes for One Year |
|
$1,538.67 Taxes for One Year |
As you can see from this example, it is very beneficial to file a Principal Residence Affidavit for your principal property!
Filing the Principal Residence Exemption Affidavit
A principal residence affidavit should be filed at the Assessor’s office in the Township. In most cases, the Property Transfer Affidavit and Principal Residence Exemption Affidavit are filed at the same time.
You can only claim the exemption for the home you occupy as your principal residence.
What is market value?
The market value is used by lenders, sellers and buyers to estimate the appropriate selling price given market conditions. In Michigan, market value is defined as "True Cash Value." Determining a property's value is the Assessor's job, and is required for every piece of property, no matter how large or small. This process is repeated yearly.
The Assessor is required by state law to assess at 50% of true cash value all assessable property, as of December 31. This includes homes, factories, commercial properties, vacant and personal property (machinery and equipment for commercial and industrial properties.)
Since assessments must be set by market value, changing real estate values in the community will be reflected in the assessments. Market value is a product of the prices paid for property. As prices increase/decrease, so does market value.
All properties do not change in value to the same degree. Many factors influence values; waterfront properties, for example, may increase in value more rapidly than others.
How are properties appraised?
To find the value of any piece of property, the Assessor must first gather all pertinent information in the community, such as real estate sales, construction costs, rental incomes, operating expenses, interest rates and any other factors available. Utilizing the information collected, the Assessor can then go about finding a property's value in three different ways.
Sales comparison approach
Cost approach
Income approach