Changing Property Taxes
Did you know that the taxes on the residence might not be the same for the buyers as they were for the sellers? As a valuable service, the following facts may help to keep you informed:
1. Property taxes are based on the current State Equalized Value (SEV), which in turn is based on the assessor's opinion of the market value, and on millage, which varies, by community.
2. The millage rate is determined in part by passage of local tax issues for schools and other public works projects such as sewer lines, roads, etc. If your community has a tax rate of 50 "mills" then you will pay $50 for every $1000 of your homes SEV.
3. In 1994, Michigan voters passed Proposal A, which made significant changes to Michigan's property tax laws. Basically, the law protects homeowners from experiencing large or sudden increases in their tax bills by limiting or "capping" the increase in the SEV.
4. From one year to the next, the SEV cannot grow more than the annual rate of inflation ( as measured by the consumer price index) or five percent, whichever number is smaller.
5. When a home is sold, the base SEV may be adjusted. The sale price of the home determines its market value, which in turn may impact the new SEV. This can make a significant change in the amount of property taxes paid by the new owner.
It is recommended that clients and customers check with the city assessor's office to make sure they have an accurate estimate of the taxes on their new home.