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Property Assessment and Taxable Value
Understanding Your Property Assessment and Taxable Value
The following is a brief explanation of how your Assessed and
Taxable Values work.
Many properties in the City will experience declining assessed
values for 2009. The Assessor’s Office spends a considerable amount
of time analyzing actual sales that have occurred over the past year
in order to estimate property values as of December 31, 2008.
A 12
month sales study, as required by the State Tax Commission, has been
used to establish the proposed assessed values for 2009. The 12
month sales study covers a period from October 1, 2007 to September
30, 2008.
 In February of 2009, property owners will
receive a Notice of Assessment, Taxable Valuation, and Property
Classification. If you haven’t received one in the mail, please
contact our office. The Notice provides the property owner with
pertinent information regarding their property. There are three
important areas for review.
- The Notice provides the 2009 valuations, the 2008 valuations
and the amount of change.
- The document will show if the property’s taxable value was
"uncapped" as a result of an ownership transfer. The Notice will
indicate whether there "was" or "was not" a change of ownership of
the property during 2008. If there was a transfer of ownership,
the taxable value will "uncap" and be the same as the Assessed
Value.
- The Notice will indicate the percentage of the property being
used as a Principal Residence. If you own and occupy the property
as your principle residence, the percentage indicated should be
100%. Property owners are encouraged to review each of these areas
for accuracy. Please contact the Assessor’s Office if you should
have any questions or concerns.
If the property owner is in disagreement with the valuations on
the Notice, they may appeal to the March Board of Review. The
meeting dates are listed on the Notice. Valuation disputes must
be heard by the March Board of Review.
Listings of unsold homes and sales occurring in 2009 will not be
considered by the March Board of Review in estimating value on
December 31, 2008. Please feel free to contact the
Assessor’s Office for more information.
Assessed Value represents 50% of the estimated property value for
2009. Taxable Value is a mathematical formula which is based on the
preceding years Taxable Value increased by the Inflation Rate
Multiplier (IRM). The 2009 IRM for the entire State has been
determined to be 4.4% (2.3% for 2008) and is applied by each
municipality. In addition to the IRM, Taxable Value may also
increase for physical additions or decrease for physical losses.
During 2009, the appropriate millage rates will be multiplied
against the 2009 Taxable Value to determine the 2009 property taxes.
The following examples illustrate how the Taxable Value can
change independently of the Assessed Value. If a homeowner has owned
their home since the Constitutional Amendment, known as Proposal A
passed in 1994, they could receive 2008 & 2009 values as follows:
| |
Assessed Value |
Taxable Value |
| 2008 |
$200,000 |
$160,000 |
| 2009 |
$200,000 |
$167,040 (increase of 4.4% IRM) |
The previous example shows that Assessed Values can remain the
same, while Taxable Values show an increase. This is a function of
the statute. Taxable Value may increase from year to year, until its
ceiling of Assessed Value is reached. In that situation,
Assessed Value becomes the Taxable Value. The following example
illustrates this concept:
| |
Assessed Value |
Taxable Value |
| 2008 |
$200,000 |
$196,000 |
| 2009 |
$200,000 |
$200,000 |
In the above example the 2008 Taxable Value of $196,000 would
increase to $204,620 if the 4.4% IRM is applied. However, since the
2009 Assessed Value is only $200,000, Proposal A requires that
Taxable Value cannot exceed Assessed Value.
The following example illustrates a property demonstrating a
reduction in property value in the marketplace while Taxable Value
increases:
| |
Assessed Value |
Taxable Value |
| 2008 |
$200,000 |
$180,000 |
| 2009 |
$190,000 |
$187,920 (increase of 4.4% IRM) |
Even in a declining market, a Taxable Value will increase on an
annual basis by the IRM until it is equal to the Assessed Value. The
Constitutional Amendment (Proposal A) limited the amount that
Taxable Value could increase on an annual basis. Since its
implementation, the majority of property values in the City of Novi
have increased greater than the IRM. This has limited the property
taxes that would have been collected if Proposal A had not been
implemented.
The March Board of Review does not have the authority to
change the increase in Taxable Value based on the Inflation Rate
Multiplier of 4.4%.
Again, Notices of Assessment, Taxable Valuation, and Property
Classification are mailed to all property owners of record in
February. The IRM percentage is printed on the Notice. Please review
the Notice carefully by checking mathematical calculations,
principle residence exemption percentage and transfer of ownership
information. Board of Review and assessment information will be
broadcast on cable channel 13 periodically during February and
March. Should you have any questions or concerns about your Notice,
feel free to contact the Assessor’s Office at 248-347-0485 or
email
the Assessing Department.
D. Glenn Lemmon, City Assessor
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