The taxable value of your home is the actual amount to which the county and state millage rates apply but is determined by several factors. One factor is the true cash value, which each local tax assessor determines. Assessors may consider market value, the cost to replace, and potential income production.
Another factor is the assessed value, which is 50% of the true cash value. The assessed value is then equalized by the county equalization department, which considers sales in particular neighborhoods. The resulting number is the state equalized value (SEV). But wait, there’s more.
Prior to 1994 and “Proposal A,” the SEV alone determined the taxable value. Now, the SEV is calculated but the ultimate taxable value can only increase by the lesser of 5% over last year’s taxable value (including additions and losses to the property) and the rate of inflation as determined by Michigan’s Consumer Price Index (CPI), which in 2012 is 2.7%. The taxable value of your home, then, can be called its “capped value.” Please note, however, that unless an exemption applies, a transfer of ownership will “uncap” the taxable value, which will reset to the current SEV.
In 2012, Mackinac County had over $1 billion in assessed real property! If you need help managing your real estate, call me for a free consultation.