Frequently Asked Questions
PLEASE FEEL FREE TO CONTACT THE ASSESSOR’S OFFICE AT 734-699-8946 IF YOU HAVE ANY FURTHER QUESTIONS.
GENERAL QUESTIONS AND FACTS REGARDING THE ASSESSMENT PROCESS
ASSESSED VALUE (AV) = is required by the State Constitution, a property is uniformly assessed at 50% of the usual selling price. The usual selling price is often referred to as “True Cash Value”.
• STATE EQUALIZED VALUE (SEV) = Assessed Value as adjusted following “Equalization” as determined by the County Board of Commissioners and the State Tax Commission to ensure that the property is at the constitutional 50% level of assessment.
• TAXABLE VALUE (TV) = TV is the amount upon which your property taxes are calculated. TV changes from year to year by the “rate of inflation” or 5% (also known as the Consumer Price Index) (CPI) whichever is lower. For 2021 the inflation rate multiplier as determined by the State Tax Commission is 1.014.
• PROPERTY TRANSFER AFFIDAVIT (PTA) = this form must be filed whenever real estate is transferred. A transfer of property is not limited to a transfer including a monetary transaction. A transfer of property can occur, including but not limited to, upon an inheritance or a gift. It must be filed by the new owner with the assessor within 45 days of the transfer. If it is not filed timely, a penalty of $5/day (maximum $200) applies.
• PRINCIPAL RESIDENCE EXEMPTION (PRE) = formerly known as the “Homestead Exemption”. The Principal Residence Exemption (PRE) exempts you from paying 18 mills of school operating tax. The deadline to file the PRE Affidavit for taxes levied after December 31st is June 1 for the summer tax levy and November 1 ONLY if there is a levy of school taxes (the Township levies the school tax levy in the summer only).
Taxable value times millage rate divided by 1,000 equal taxes. To estimate your property taxes, the 2020 millage rate information is:
THESE AMOUNTS DO NOT INCLUDE ANY ADMINISTRATIVE FEES OR SPECIAL ASSESSMENTS THAT MAY APPLY TO YOUR PROPERTY. There is a Property Tax Estimator located at: www.michigan.gov/propertytaxestimator
Assessed Value is defined by State Law as 50% of the true cash (or market) value of the property as of December 31st of the preceding year. True cash value is what your property would sell for in the open market. Taxable Value is derived from a formula created by Proposal A in 1994, designed to limit Taxable Value increases to the rate of inflation.
All Assessed Values are calculated according to State Tax Commission standards. Buildings are measured and features are noted to determine a replacement value using the State Assessor Manual, which contains average construction costs for the State of Michigan. The resulting cost is then adjusted by a county multiplier which will adjust the average State costs to Wayne County construction costs. Depreciation is then deducted from the replacement cost. This resulting value is further adjusted by an Economic Condition Factor (ECF) which adjusts the value to its specific neighborhood in Van Buren Township. (ECF’s are determined by analyzing and verifying sales in each neighborhood). The final building value is combined with the established land value for a true cash (or market) value. 50% of this true cash value is the assessed value.
Taxable Value is applied to the millage rate to determine taxes to be paid. In accordance with the 1994 constitutional amendment known as Proposal A the first step in the process is to calculate the Capped Value of every parcel of assessable property using the following formula:
PRIOR YEAR’S TAXABLE VALUE – TAXABLE VALUE OF LOSSES X LESSER OF 5% OR CPI MULTIPLIER + TAXABLE VALUE OF ADDITIONS = CAPPED VALUE
CPI is the Consumer’s Price Index (Inflation rate) as determined by the State of Michigan each fall. The legislature has defined Taxable Value to be the lesser of SEV or Capped Value. Assessors are required to annually calculate a Capped Value for each individual parcel of real property. The Capped Value is then compared to the SEV of that property, and the lower of the two will be its Taxable Value upon which taxes are levied. The year following an eligible transfer of ownership, the property will become “uncapped”.
Under Proposal A, a property is “uncapped” in the year following a transfer of ownership. This means that the taxable value for the year following a transfer will be the same as the assessed value for that year. The year after the property is uncapped, increases to the taxable value will once again be limited by the Consumer Price Index or 5%, whichever is lower unless there are physical changes made to the property.
Under Proposal A, you and your neighbor can live in identical houses and pay a different amount of taxes. If your neighbor has lived in their home for several years and you recently purchased yours, you may pay more taxes than your neighbor. This would be because of the “uncapping” as explained above.
By State Law, a Property’s Assessed Value is not half its purchased price, but half of its market value. With each sale, different factors go into an agreed upon sales price between a buyer and seller. In today’s market we have Bank Owned Sales, Auction Sales, Estate Sales, Short Sales, etc. and one sale does not and cannot determine the average sales price for a given neighborhood. Therefore, it is important to note that 50% of a sales price does not automatically become the SEV for that property. The SEV is based upon the overall market within a neighborhood and that “one sale” does not necessarily determine the value for that property. Only verified and qualified sales are used to determine values. This process can be compared to the methods that an appraiser uses when they gather comparable sales to determine market value when a new mortgage is being applied for.
The General Property Tax Law requires all properties to be evaluated each year. This does not necessarily mean that a field inspection is made of each individual parcel each year. Assessed Values are generally determined by mass appraisal techniques. This is done by neighborhood analysis of verified sales as well as performing field inspections on samples of properties. Other forms of evaluation include, but not limited to, building permits, parcel splits and combinations along with site verifications of sales. It is important that property owners periodically review their property records to verify the property characteristics (square footage, number of bathrooms, etc.)
Assessment information on your property is public record, and the Assessor’s Office has some of its data available on the Township’s website. You can access this information free by visiting the online property information on our website or it may be obtained through the Assessor’s Office during normal business hours.
The Assessment Office is more than willing to assist Property Owners with a letter to their Mortgage Company estimating tax amounts. We see many cases in which a lending institution is estimating taxes based on an incorrect millage rate or taxable value increasing the monthly mortgage payment. Please contact the Assessment Office at 734-699-8946 for more information.
QUESTION REGARDING THE CURRENT REAL ESTATE MARKET
To determine market values as of 12-31-20 for the 2021 assessments, a two-year study was conducted that includes sales between the time period of April 1, 2018, through March 31, 2020. Most residential properties in 2021 will experience an increase in their assessed value based on market sales that were reviewed in each neighborhood. However, in accordance with Proposal “A” passed in 1994 by Michigan voters, your Taxable Value will likely only increase by the Consumer Price Index which is 1.014 for 2021. New Construction or a Transfer of Ownership may increase your taxable value more than the Consumer Price Index.
There are two components to property tax calculations-millage rates and taxable value. Millage Rates are either statutorily established or by a vote of the people. Your taxable value is multiplied by the established millage rate.
Taxable Value is determined by comparing the Assessed Value of your property to the Capped Value of your property. The Capped Value is calculated using the following formula: 2020 Taxable Value minus the value of any physical losses to the property, multiplied by the Inflation Rate Multiplier (IRM), plus the value of any physical additions to the property. The Taxable Value is the lower of the Assessed Value and the Capped Value.
However, if you purchased your property last year, your property becomes uncapped and your Taxable Value will be equal to the Assessed Value.
THE BOARD OF REVIEW HAS NO AUTHORITY TO ADJUST MILLAGE RATES OR TAXABLE VALUES.
The 2021 Inflation Rate Multiplier (IRM) is 1.014. If your property did not have any physical changes in 2020, your calculated capped value may be 1.014 (1.4%) higher than your 2020 taxable value. The Inflation Rate Multiplier (IRM) is given to us by the State of Michigan and every municipality in the State must use it to calculate the taxable value. The multiplier is not subject to appeal, and in most circumstances, neither is taxable value.
General Property Tax Act requires that the assessed value be calculated using the usual selling price and considering sales of similar properties. In addition, assessed values are based on arms-length sales. Arms-length sales generally exist when the property is listed on the open market and there is a willing and able buyer and seller. The sale of a property during or subsequent to foreclosure is usually
considered a forced sale because the seller is not typically motivated to obtain the property’s market value. Sales of property by financial institutions can only be considered under strict conditions.
Normally, sales that involve mortgage foreclosures and sales from relocation companies (Distressed Sales) are not considered typical sales and are not used to determine the value of property in the assessment process. The State Tax Commission has allowed the use of these sales in a declining market, but only under very strict conditions. In part, they must be in the same physical condition as when they are assessed (normal maintenance). Sale prices must be verified to see if they reflect the TOTAL consideration received by the grantor; including but not limited to any concessions or mortgage insurance payments made to the lender. Van Buren Township has researched and inspected all sales involving financial institutions and has used only those that comply with the State Tax Commission’s requirements.
Auction sales are not an arms-length sale and cannot be used to determine assessed values. Assessments are based on the arms-length sale of properties similar to yours.
When a relocation company takes possession of a property, the “seller” will sometimes sign an incomplete deed. Even though the relocation company has bought out the seller’s interest in the property, title does not transfer until a buyer is found and the deed is delivered to that buyer. Most relocation companies do not notify the township of the transaction and we are unaware that it has taken place. Absent any notice of the transaction, the original owner is still reflected as the owner of record.
The answer to this question is no. Third-party websites aren’t local to every real estate market, yet they provide estimates of home values for almost any home in the United States. It is impossible that a third-party entity headquartered in California or New York can provide you with an accurate value for a home located in Van Buren Township. Websites such as Zillow and Trulia use computer-generated home values based on calculations and algorithms, but don’t take into consideration what is going on specifically in your area that may influence your home value. The data used by these sites don’t filter out “bad” sales or make adjustments for differences between your home and the other sales.