Understanding Your Property's Assessed and Taxable Values

The Assessing Department spends a considerable amount of time analyzing arm’s-length property transactions and establishing a sales study, as required by the State Tax Commission.  Property values are determined as of December 31 (Tax Day) every year.  To establish assessments for the 2023 tax year, the Novi sales study period was April 1, 2020, through March 31, 2022.

Every February, property owners receive a Notice of Assessment in the mail.  This notice provides the property owner with pertinent information regarding their property.  The property owner should review three important areas of the notice.

  • The notice provides the current year tentative valuations, the prior year valuations, and the amount of change.
  • The notice will indicate whether there "was" or "was not" a change of ownership of the property during the previous year.  The document will show if the property’s taxable value was "uncapped" as a result of a non-exempt transfer of ownership.  If this did occur, the taxable value will "uncap" and be set equal to 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 principal residence, in most circumstances the percentage indicated should be 100%.  

Property owners are encouraged to review each of these areas for accuracy.  Please contact the Assessing Department if you have any questions or concerns.

If the property owner disagrees with the Assessed Value on the Notice, they may appeal to the March Board of Review.  The meeting dates and times are listed on the back of the Notice.  Valuation disputes can only be heard by the March Board of Review.  The July and December Boards of Review do not have authority to hear valuation appeals.

Assessed Value represents 50% of the property’s estimated True Cash Value.  Taxable Value is determined by the Capped Value Formula:

(Preceding year’s Taxable Value – physical losses (demolition, etc.)) x Inflation Rate Multiplier + physical additions (new or omitted items or construction).
 
The 2023 Inflation Rate Multiplier (IRM) for the entire State has been determined to be 1.05, or 5.0%, and is applied by each municipality.  For the 2023 tax statements, the appropriate millage rates will be multiplied against the 2023 Taxable Value to determine the 2023 property taxes.

The following examples illustrate different ways the Assessed and Taxable Values can change:  

  Assessed Value Taxable Value
2022 $183,600 $166,000
2023 $183,600 $174,300  (2022 Taxable Value x 1.05 IRM)


The above example shows that the Assessed Value can remain the same, while the Taxable Value increases.  This means that the market in that neighborhood was level despite rising inflation rates.  

  Assessed Value Taxable Value
2022 $183,600 $166,000
2023 $198,200 $174,300  (2022 Taxable Value x 1.05 IRM)


The above example shows that Assessed and Taxable Values can both increase at different rates of change.  The Assessed Value increased at a rate of 7.95% versus the 5.0% IRM.
 

  Assessed Value Taxable Value
2022 $183,600 $166,000
2023 $177,900 $174,300  (2022 Taxable Value x 1.05 IRM)


The above example shows that the Assessed Value can decrease, while the Taxable Value increases.  This indicates a drop in market conditions, but an increase in inflation rates.
 

  Assessed Value Taxable Value
2022 $183,600 $166,000
2023 $172,400 $172,400  (2022 Taxable Value x 1.05 IRM)


The above example shows the Assessed Value decreasing below the Taxable Value’s capped value calculation.  Taxable Value cannot be higher than Assessed Value, so it is set based on the Assessed Value. 

The March Board of Review does not have the authority to change Taxable Value unless a reduction is made to the Assessed Value that would affect the Taxable Value.  The IRM is printed on the Notice of Assessment.  Please review the notice carefully, taking note of the mathematical calculations, the principal residence exemption percentage, and transfer of ownership information.  Should you have any questions or concerns about your Notice of Assessment, feel free to contact the Assessing Department at 248-347-0485 or email the Assessing Department.