Each year the Assessor’s Office must calculate the Assessed Value of each property. In determining the assessment, the Assessor reviews the characteristics of each property, identifies area neighborhoods, and uses a sales study to analyze market values within each neighborhood, comparing the sale prices to the assessed values.
Historically the State of Michigan requires a two year sales study be conducted unless the local assessor or County Equalization can demonstrate that a one year study is more appropriate. The State Tax Commission issued Bulletin No. 9 of 2009 which orders use of a single year study for the 2010 assessments unless County Equalization presents compelling evidence to support the use of a two year study.
For the City of Coldwater a one year sales study was conducted using sales from October 1, 2008 to September 30, 2009. This one year study was then analyzed by neighborhoods and a factor was assigned to each area reflecting the actual activity within your neighborhood. The particular changes in your assessment are a result of sales activity within your area and these sales are used to determine the usual selling price of homes.
Similarly, sales or appraisal studies were conducted for Commercial, Industrial and Agricultural classes.
The State Equalized Value is the Assessed Value after adjustment following the County and State Equalization process. Often the Assessed Value and the State Equalized Value are the same. The County Board of Commissioners and the State Tax Commission must review local assessments and adjust or “Equalize” assessments by property class if the assessments are above or below the constitutional 50% level of assessment.
Taxable Value is the lessor of the State Equalized Value or the Capped Value unless the property experienced a transfer of ownership in the prior year. The Capped value limitation does not apply if you had purchased your property in a prior year. Under Proposal A, which is a constitutional state law, taxes are calculated on taxable value. Taxable value by law is required to be increased or decreased by the CPI (Consumer Price Index) or 5% whichever is lower. The CPI is calculated by the State of Michigan and is set in statute. Local units cannot develop or adopt or use an inflation rate multiplier other than the one calculated by the State.
Capped Value is calculated by multiplying the prior years Taxable Value, with adjustments for additions and losses, by the CPI as calculated by the State of Michigan and cannot increase by more than 5%. Generally speaking, this means that unless the current year SEV is less than the previous year Taxable Value multiplied by the CPI, the current years Taxable Value will increase or decrease by the CPI.
The law defines True Cash Value as the usual selling price of a property. The Legislature and the Courts have clearly stated that the actual selling price of a property is not a controlling factor in True Cash Value or Assessed Value as calculated by the Assessor. For this reason, when analyzing sales for the purpose of determining assessment changes, the Assessing Office will review all sales but exclude non-representative sales from the assessment analysis.
Inherent in the definition of selling price is the assumption that the sale does not involve any element of distress from either party. The State Tax Commission has issued guidelines concerning foreclosure sales and generally speaking theses guidelines preclude the Assessor from considering foreclosure sales when calculating values for assessment purposes. For this reason, all distressed sales, such as sales involving mortgage foreclosures or sales involving transfers to or from relocation companies, are not considered as typical sales in the valuation of property for assessment purposes nor are they reliable indicators of value when making market comparisons for current assessed values or appeals.
On March 15, 1994, Michigan voters approved the constitutional amendment known as Proposal A. Proposal A was designed to limit the growth in property taxes by the Consumer Price Index (CPI) until ownership (or interest in a property) was transferred.
When a transfer occurs the following years SEV becomes that years Taxable Value. In other words if you purchased a property in 2009, the taxable value for 2010 will be the same as the 2010 SEV. The Taxable Value will then be “capped” again in the second year following the transfer of property. Again, it is important to note that a property does not uncap to the selling price but to the SEV in the year following the transfer of ownership. A Property Transfer Affidavit is required to be filed within 45 days by the new owner whenever property is transferred. See the form for instructions.
If you own and occupy your home as your principal residence, it may be exempt from a portion of local school operating taxes. You may check your percentage of Principal Residence Exemption on your “Notice of Assessment.” You may not claim another exemption in another state. If you qualify and wish to claim an exemption for the current year, a Principal Residence Exemption Affidavit must be filed with the Assessor’s Office on or before May 1st. The exemption continues until the use of your home as your PRE changes. Furthermore, if you currently have a Principal Residence Exemption on your property and you no longer own and occupy the property as your residence, you must rescind the exemption with the Request to Rescind Homeowners Principal Residence Exemption and file this with your local assessor’s office.
Personal Property is the tangible (physical) assets of a business. Personal Property should not be confused with real estate property. Personal Property consists of moveable items like furniture, fixtures, machinery, and office and computer equipment.
You must report the full acquisition cost new, in the year of its acquisition new even if you have fully depreciated the asset or have expensed the asset under Section 179 of the Internal Revenue Code or under your accounting policies. All costs reported must include freight, sales tax and installation costs.
If an item was purchased used, you must report the original cost of the item in the year it was purchased AS NEW. (You may have to contact the seller for original cost information).
Personal Property statements are filed each year with the local jurisdiction where the property was located on December 31st of the preceding year. Statements are to be completed, signed and returned by February 20th. The assessor has no statutory authority to extend the filing deadline. If the Assessor sends a personal property statement and it is not completed and returned by the taxpayer, the assessor is required to make an estimated assessment.
The General Property Tax Act also requires a taxpayer to disclose on the personal property statement all assessable personal property that is in your possession on Tax Day but you do not own.
Personal property which has been constructed by the taxpayer or a contractor under direction of the taxpayer must be reported on the statement at the cost that would have been paid to acquire the same property already constructed and installed even if the cost entered on the taxpayers accounting records is different.
The forms are available through the local assessor or on-line at the State of Michigan website. Instructions are included with the forms. There is also a Personal Property Questions and Answers Booklet available