Michigan Property Taxes

WHAT YOU NEED TO KNOW

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When shopping for a lake home in Southwest Michigan, it is very important to understand how property taxes work. The property taxes that you see on the MLS listing are not property taxes that you will pay. It is very important to look at the current State Equalized Value SEV to calculate what your property taxes will be. If you are shopping for a lake home and don’t understand how this works, feel free to contact me, Paul DeLano, Mobile (269) 445-8877

ASSESSED VALUE:

The assessed value is determined by a property’s market value.

In Michigan, a property’s assessed value is set at 50% of its market value by law. An assessor determines this value. To estimate the market value, simply double the assessed value. The assessed value reflects half of the property’s usual selling price or true cash value.

STATE EQUALIZED VALUE (SEV):

The assessed value adjusted following county & state equalization.

Michigan’s constitution requires local assessors to set the assessed value of properties at half the market value. The state reviews local assessments each year to ensure they conform to this requirement. If the assessed value is too high or too low, it is adjusted or “equalized.” That adjustment results in the State Equalized Value (SEV).

TAXABLE VALUE:

The value utilized to determine the current owner’s tax obligations.

Taxable value in Michigan property taxes is the assessed value used to calculate property taxes. The local assessor determines this value annually. The state also caps it to increase by no more than the rate of inflation or 5%, whichever is lower. However, if there’s a transfer of ownership, the property is reassessed at its market value.

PRINCIPAL RESIDENCE EXEMPTION:

(formerly known as a “homestead” exemption)

The Principal Residence Exemption (PRE) in Michigan provides a tax break for homeowners on their primary residence. It must be the owner’s principal residence, and the owner must file a PRE affidavit with the local assessor. The PRE exempts a portion of the home’s value from school operating taxes. Eligible homeowners can enjoy significant tax savings with this exemption.

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SPECIAL ASSESSMENTS:

Taxes levied for items like a sewer collection system installation.

The state allows special assessments on properties in Michigan for specific improvements or services. Examples include funding road repairs or sidewalk maintenance. These assessments are separate from regular property taxes and based on the benefit received by the property. They are typically collected along with property taxes and are subject to the same collection and enforcement procedures.

MILLAGE RATES:

The amount per $1,000.00 used to calculate taxes on property.

Michigan uses millage rates to calculate property taxes. One mill represents $1 of tax per $1,000 of taxable property value. For instance, if the millage rate is 38, the owner would pay a 3.8% tax on the property’s taxable value. Current millage rates vary by location. It is also important to note that millage rates can change over time.

TAXABLE VALUE:

What you need to know when meeting with an estimator.

The Michigan State Property Tax Estimator calculates property taxes based on assessed value and millage rates. Enter your property’s assessed value and select your county for an estimate. Remember, actual taxes may vary due to exemptions and local tax changes. This tool provides an estimate only. For precise figures, consult your local tax assessor.

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