What is Assessed Value (AV)? The assessing officer in the local government unit is required to establish the assessed and taxable value of all real and tangible personal property within the unit as of December 31 of each year. AV represents 50% of the True Cash Value of your property. The law defines True Cash Value as the usual selling price of the property on an open market with no stress, or unusual conditions placed on the sale. The Michigan Legislature &Michigan Supreme Court have clearly stated that the actual sales price of a property is not the only controlling factor in the True Cash Value and the Assessed Value as calculated by the assessing officer. The Assessing Office will analyze all sales using a mass appraisal technique that takes into account the current cost to replicate your house and then depreciates that cost based on the age of the structure. It is then adjusted to market value by comparing the depreciated cost of homes that have sold in your area. This will allow the assessor to arrive at a uniform and equitable assessment for all properties.
What is Taxable Value (TV)? For tax purposes, the taxable values were capped at the 1994 value and can only increase at the rate of inflation or 5%, whichever is less. TV is a mathematical formula which is based on the preceding years Taxable Value increased by the Inflation Rate Multiplier (IRM). The 2023 IRM for the entire State has been determined to be 7.9%. As the current rate of inflation exceeds 5%, the 2023 IRM will be capped at 5% (expressed below as a ratio) and is applied by Statewide by each municipality. In addition to the IRM, Taxable Value may also increase for physical additions or transfer of ownership and may decrease for physical losses.
How do I figure out my 2023 Taxable Value?
2023 TAXABLE VALUE = (2022 Taxable Value – LOSSES) X 1.050 + ADDITIONS
Ok, so how do I calculate my ACTUAL taxes?
Assume the 2023 Taxable Value of your Principal Residence is $50,000 and the millage rate is 36.5098. Your annual property tax would be calculated as follows: $50,000 x .0365098 = $1,825.49 **This is an example only to show the process**