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One of the most important changes that occurred with the passage of Proposal A was a limit placed on the percentage that property taxes can increase each year. This limitation was accomplished by creating a new term called “Taxable Value.” Taxable Value (TV) is defined as the lesser of a property’s SEV or “Capped Value.” A property’s Capped Value (CV) is defined as the previous year’s taxable value increased by the inflation rate or 5%, whichever is less, plus construction changes.
The State Tax Commission (STC) determines this inflation rate each year. What this tax system has meant for most residents is that if you have not purchased your home in the previous year and have not made any physical additions to your property (like building a garage), your property taxes will not increase by more than the previous year’s inflation rate or 5%, whichever is less.
The 2014 March Board of Review (BOR) will be in session from March 17, 2014, until at least March 21, 2014. These 2 3-member committees, made up of City residents, are responsible for hearing appeals of assessment figures, property classification and hardship exemption appeals. It is the responsibility of the BOR members to review the assessments placed on all of the properties that are appealed and to determine whether these values represent the actual true cash value of each specific property. Please see your assessment notice for more information on making an appointment with the 2014 BOR. All property owners that file an appeal to the 2014 March BOR will receive a written response around the first week of June. Residential property owners that are not satisfied with the decision of the BOR will have the right to appeal to the Michigan Tax Tribunal.
Another important issue to address is that the specific sale price of a property will not automatically determine that property’s assessed value in the year following a transfer. The Assessing Office determines a land and building value for all of the properties in the City and annually adjusts these values based on sales that have occurred during each sales study period. Although current law defines a property’s assessed value as the “true cash value” of a property, not every sale price will reflect that property’s actual market value. For example, one would expect that the sale price from parents to one of their children could be less than if they had sold to someone with which they had no prior relationship. That is the reason that the Assessing Office determines assessed values by using accepted mass appraisal techniques and does not reassess properties based on one sales transaction.
It is the responsibility of the buyer in a transfer to file a Property Transfer Affidavit (2766) form with the Assessing Office within 45 days of the property transfer. Blank affidavits are available at the City Assessing Office and on the Department of Treasury website or the City’s website. Department of Treasury
If you have a Principal Residence Exemption (PRE) on your property and you no longer own and occupy the property as your primary residence, you must file a Request to Rescind Homeowner’s Principal Residence Exemption (2602) form with the Assessing Office. These 2 forms are also available at the Assessing Office and on the Department of Treasury and Sterling Heights websites. Department of Treasury
The owner claiming an exemption must annually submit this form on or before December 31 to verify that the property for which the PRE is retained is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose. If the conditional rescission requirements are all met, this form would take the place of STC Form 2602.