MTA Shares Assessment and Property Tax Basics
(Crystal A. Proxmire, Feb. 4, 2019)
Okemos, MI – Shila Kinder is passionate about her job as Assessor for Mecosta County, a profession that requires understanding complex tax laws, organizing large amounts of data, and gracefully discussing tax bills with residents who may disagree with her work.
That passion also extends to teaching elected officials across the state how assessment and taxation work. Kinder gave a four hour workshop on behalf of the Michigan Townships Association in Okemos on Jan. 31, a class that left officials feeling more empowered as conversations of taxes come up in their communities.
Some basic things to know about assessments are:
~ Dec. 31 is the day of assessment for all properties in Michigan. Taxes are based on the value that day. If someone’s house burns down on Jan. 2 or 3, they are still assessed based on the home having been there until the next assessment. The same is true with improvements. If a lot is vacant on Dec. 31, but has a house in Feb or March, the lot is still assessed as vacant until the next Dec. 31.
~Everything is taxable except when it is specifically exempt. Statutory exemptions include religious, charitable, educational, and governmental organizations. There are also exemption programs for a variety of reasons, such as instituting green features, confined animal farming operations, some agricultural applications and more.
~Michigan’s Constitution requires that taxation be based on value of property, and that taxation must be fair. Taxes pay for services like education, roads, police and fire protection, records, administration, parks, downtown developments, libraries and more.
~Municipalities may have their own assessor, they may hire an independent assessor, or they may contract with the county.
~Properties are assessed for actual value, then taxed at the “taxable value,” which is 50% of the actual value.
~Michigan law restricts the increase of property taxes to the rate of inflation. However, when a property is sold, the cap is removed and taxes can go up to be based on the current value. This jump in taxes can be a surprise to a new property owner.
~Properties are classified based on actual use, not on zoning. Property owners may want their classification changed so they can get an exemption, so it’s important to make sure the accurate use is reflected. If a property has multiple uses, the use that adds the most value is the one that is used for classification. For example if a property has $200,000 value in farm land and $100,000 for a home, the property is agricultural. However if a property has $200,000 in farm land and a $350,000 house, the property is residential.
~Assessors determine value by looking at similar properties that have sold in the area. They may also go out to properties to look at additions, modifications, new structures, and other changes.
~Added value of construction is calculated based on official numbers set by the state for cost to build as well as cost of depreciation each year. There is a base number, and each county has a multiplier for that to reflect variances in regional values/costs.
~Values are further refined by an “Economic Condition Factor,” which adjusts values for the local economy, even looking at specific neighborhoods within a municipality. For example, in a city with a lake, the neighborhood with lake would have a different ECF than the neighborhood without the property-value-enhancing views.
~Assessment roles must be completed by the first Monday in March.
~Once an assessor turns in the rolls, they cannot make any adjustments or corrections. Any changes must be done through appeal
~If property owners disagree with an assessment, they can appeal to the local Board of Review. The Board of Review is made up of community residents, people who know the neighborhoods being discussed.
~An appeal needs to focus on the matter of the value assigned by the assessor. “What is your property worth, and how can you prove it?” Kinder said.
Kinder talked about the value of having an assessor who is skilled at working with the public, including answering questions of city leaders and responding to inquiries from residents and business owners.
“A lot of times residents just want to feel listened to,” Kinder said. “We hear complaints like ‘I don’t like how that assessor talked to me,’ or ‘they didn’t return my call,’ or ‘they didn’t answer my question.” Kinder said good communication builds trust and makes the process easier for everyone.
She also said that appeals are common, and not a reflection of quality of work. She added that appeals often increase when there are more homes being sold, because people are trying to get a lower assessment, or they may simply be surprised by the tax bill.
Also, there can be mistakes made or changes that an assessor may not know about. “That’s why we have this process. It’s why we have these layers of protections and appeals,” she said. “The goal of assessment, and the law, is to have a system that is fair and equitable.”
The Michigan Townships Association offers advanced classes for those who want to learn more about the assessment process, and is particularly useful for residents serving on local Boards of Review. For more on Michigan Townships Association, check out their website here.
Property owners in Oakland County who want to know more about assessment and taxation, and to see what data is available for their property, can visit the Oakland County Treasurer’s Website here.