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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.
Although many properties in the City have experienced assessed
value increases for 2007, some property values have shown very
little growth, and in some cases have even experienced a decline in
assessments. 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, 2006.
Please review the enclosed Notice of Assessment, Taxable
Valuation, and Property Classification. The Notice provides the
property owner with pertinent information regarding their property.
There are three important areas for review. First, the Notice
provides the 2006 valuations, the 2007 valuations and the amount of
change. Second, 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 2006. If there was a transfer of
ownership, the taxable value will "uncap" and be the same as the
Assessed Value. Third, 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. Please feel free to
contact the Assessor’s Office for more information.
Assessed Value represents 50% of the estimated property value for
2007. Taxable Value is a mathematical formula which is based on the
preceding years Taxable Value increased by the Inflation Rate
Multiplier (IRM). The 2007 IRM for the entire State has been
determined to be 3.7% (3.3% for 2006) 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 2007, the appropriate millage rates will be multiplied
against the 2007 Taxable Value to determine the 2007 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 2006 & 2007 values as follows:
| |
Assessed Value |
Taxable Value |
| 2006 |
$200,000 |
$160,000 |
| 2007 |
$200,000 |
$165,920 (increase of 3.7% 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 |
| 2006 |
$200,000 |
$196,000 |
| 2007 |
$200,000 |
$200,000 |
In the above example the 2006 Taxable Value of $196,000 would
increase to $203,250 if the 3.7 % IRM is applied. However, since the
2007 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 |
| 2006 |
$200,000 |
$180,000 |
| 2007 |
$190,000 |
$186,660 (increase of 3.7% 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 3.7%.
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
us.
D. Glenn Lemmon, City Assessor
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