“My name is Christopher Coucke, and I am excited to be the new property tax assessor for the City of DeWitt. I have worked as a property tax assessor since 2006, in cities and townships throughout Michigan and hold a Michigan Master Assessing Officer certification through the State Tax Commission. In addition to my assessing certifications, I hold a bachelor’s in accounting from Central Michigan University and a master’s of public affairs from Indiana University, where I studied public finance and public policy analysis. I currently live in Holt and grew up on the east side of the state.”
Change of Assessment Notices is mailed to property owners in late February. The ” March Board of Review Information” section details the dates and times the Board of Review meets to hear appeals in March. The March meeting is the only time that property owners are allowed to protest value. Appeals may be made either in person or by writing. The Board of Review consists of three City residents appointed by the City Council. If you do not agree with the Board of Review’s decision you have the right to file an appeal with the Michigan Tax Tribunal before July 31st of the current year.
All property may be divided into two major categories: Real Property and Personal Property.
Real Property is generally defined as land and all things attached to the land. Interest, benefits, and rights inherent in the ownership of physical real estate.
Personal Property which consists of movable items not permanently affixed to, or part of, the real estate. This includes furniture and fixtures, machinery and equipment belonging to a business; certain public utilities; structures on leased land and other similar properties.
Assessed Value is 50% of the estimated fair market value which is determined by the City Assessor. Assessed values change with the market year to year. The assessor does not create value, but simply has the legal responsibility to determine it and value the property accordingly.
SEV is State Equalized Value and a result of the county equalized value reviewed by the State Tax Commission. The State Tax Commission has the authority to add or subtract a blanket factor to all properties in a class if the county’s submitted values do not equal 50% of market value.
In 1994 Proposal A brought significant changes to the State’s Property Tax System. However, Proposal A did not change standard assessment practices; all real and personal property must still be assessed at 50% of its true cash value. Proposal A created a different value (taxable value) for property taxes to be calculated. Taxes are based on taxable value, not state equalized value (SEV). Proposal A also requires homeowners to file a Principal Residence Exemption Affidavit and Property Transfer Affidavit.
Taxable value was created by the passage of Proposal A in 1994. Property taxes are based on taxable value, not the SEV. Taxable value = Lesser of assessed value or capped value.
Capped value is the lesser of +5% or the Consumer Price Index (CPI) applied to the prior year’s taxable value. The formula to compute is: (Prior year’s taxable value – losses) x (5% or CPI, whichever is lowest) + additions = capped value. The process continues until there is change in ownership (transfer) which would cause an “uncapping”.
When ownership is transferred on a property, the valuation is “uncapped”. The SEV is the new starting point for a buyer and the capping process starts all over again on the property until another transfer of ownership occurs. Beginning December 31, 2013 (PA 497 of 2012), the transfer of residential real property (homestead or non-homestead) is exempt from uncapping if the transferer by blood or affinity to the first degree and the use of the property does not change following the transfer of ownership. A change in use would be from principal residence to rental, which would not be exempt from uncapping due to a transfer. Affinity to the first degree includes the following relationships: spouse, father or mother, father or mother of a spouse, son or daughter, including adopted children, and son or daughter of a spouse.
Taxable value/1000 x millage rate = tax amount.
When our State Legislature passed Proposal A in 1994, the Legislature did not anticipate the current economy and declining property values. Until 2007, Proposal A worked as designed, limiting the increase in taxes to the rate of inflation. There had been a steady increase in the real estate market, which typically was more substantial than the rate of inflation, thus “capping” tax increases to the rate of inflation.
Higher property taxes, with declining property values, was a difficult concept to grasp. Neither local assessors, treasurers nor the Board of Review can change the law. Any changes to Proposal A Legislation to address a declining real estate market in relation to property taxes would involve a constitutional amendment and a vote of the people. Property values seemed to have bottomed out in 2012 and started to recover in 2013.
If you purchased your house in a different year than your neighbor’s, your taxable value would have been uncapped to the same as the SEV. Although you think your home is the same as your neighbors; there are many interior and exterior attributes that affect a property’s value such as lot size differences, year built, condition, finished basements, decks, etc.
Public Act 123 of 1999 shortens the amount of time property owners have to pay their delinquent taxes before losing their property. Property owners with taxes that are 2 years delinquent will be foreclosed and the property sold at public auction. For example, people who fail to pay their 2017 delinquent property taxes will lose their property to foreclosure on March 31, 2019.
With this new act, the amount of time to pay taxes has been reduced from approximately 5 years to approximately 2 years.
The deadline for a property owner to file a “Principal Residence Exemption (PRE) Affidavit” (Form 2368) for taxes levied after December 31, 2011, changed from May 1 to June 1, and a second deadline for November 1 was added. As a result, property owners that occupy a property as a principal residence and submit Form 2368 to the local tax collecting unit on or before June 1, may qualify for a PRE beginning with the current year’s summer tax levy. If a property owner occupies a property as a principal residence at any time from June 2, of the current year to November 1, of the current year and submits Form 2368 to the local tax collecting unit on or before November 1, of the current year, that property owner may qualify for a PRE beginning with the current year winter tax levy.
This dual deadline will continue throughout future tax years but is not retroactive to previous tax years. If the property is owned and occupied some time from May 2 to November 1, Public Act 114 does not allow the owner to go to the Board of Review if Form 2368 is not timely filed. Therefore, it is important that all assessors and local unit staff are aware of the change to help ensure timely filings.
For PRE forms, visit www.michigan.gov/PRE and click on “PRE Related Forms.” The updated form will be available soon under the “What’s New” section of the website.
Governor Granholm signed House Bill 4215, enacting Public Act 96 of 2008. This amendment to the General Property Tax Act enables a person who has purchased a new home and established a new Principal Residence to retain a Principal Residence Exemption (PRE) on their former homestead property, as well, if certain criteria are met. An owner may continue to receive the homestead exemption for up to three years if the property is not occupied, is not rented or leased, is for sale, and is not used for any business or commercial purpose.
The opportunity to apply and qualify for a conditional rescission began in the 2008 tax year and is not retroactive to previous tax years.
An owner may receive the PRE on the previous principal residence (Homestead) for up to three years if the property continues to not be occupied, is for sale, is not leased, and is not used for any commercial purpose. The owner must annually submit Form 4640 on or before December 31 to verify to the assessor that the property for which the PRE is retained still meets eligibility.
For example, if an owner moves sometime during 2014 and files a new homestead affidavit on the new residence, he or she would have to submit the Conditional Rescission of Principal Residence Exemption affidavit each year by December 31 to receive the exemption for 2015, 2016, 2017.
It should be noted that conditional rescissions do not apply to homes in foreclosure where the bank has taken possession but where the home is vacant and for sale. Only the owner who previously occupied the property as his or her principal residence qualifies for the conditional rescission. Companies, such as banks, do not qualify for a PRE.
If a property owner has moved to another location but still owns the previous residence and rents or leases it for only a few months, the opportunity to receive the conditional rescission is no longer available.
An owner who still owns property in Michigan but has moved out of state does not qualify; nor does the owner who still owns his property, but has moved into an apartment. The owner of the property must be eligible for and claim an exemption for his or her current principal residence. A person renting an apartment is not eligible for an exemption on the former homesteaded property.