Why are my taxes increasing while the value of my property is decreasing?
Your taxes are based on the Taxable Value of your home. Remember that the definition of Taxable Value is the lesser of SEV or last year’s Taxable Value (adjusted for physical changes) times the CPI. (1.7% for 2011).
Since the beginning of Proposal A in 1994, overall increases in SEV have generally been greater than the increase in Taxable Value capped at the CPI. The longer a property has been owned and capped, the greater the gap between SEV and Taxable Value. Even with a decrease in SEV for 2011, if there is still a gap between SEV and Taxable Value the Taxable Value will increase to the limit of the CPI cap.
If, however, the 2011 SEV is lower than the calculation of last year’s Taxable Value multiplied by the CPI, then the 2011 Taxable Value will be reduced to be the same as the SEV.
Why isn’t my assessment half of my purchase price?
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 the controlling factor in the True Cash Value or State Equalized Value. For this reason, when analyzing sales for the purpose of determining assessment changes, the Assessment Office will review sales and exclude non-representative sales from the assessment analysis. The definition of usual selling price is the assumption that the sale does not involve any element of distress from either party. For this reason distressed sales are not considered as typical sales in the valuation of property for assessment purposes.
I recently moved into my house. My neighbor and I have similar houses. Why are my property taxes higher?
This is the result of the uncapping of your taxable value. The year after a home transfers ownership the taxable value is uncapped to the SEV. Your taxable value will now be capped until the property transfers ownership again. This uncapping can result in different taxable values and different tax amounts for identical homes.
What is an “uncapping” of taxable value?
According to Proposal A, when a property (or interest in a property) is transferred, the following year’s SEV becomes that year’s Taxable Value. In other words, if you purchased a property in 2010, the Taxable Value for 2011 will be the same as the 2011 SEV. The Taxable Value will then be “capped” again in the second year following the transfer of ownership.
It is the responsibility of the buyer in a transfer to file a Property Transfer Affidavit with the Assessors Office within 45 days of the transfer. Property Transfer Affidavit forms are available at the Grosse Pointe Township Assessors Office.
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.
What sales did you use to determine assessments?
The Village of Grosse Pointe Shores, a Michigan City, is using a 12 month sales study for the 2011 assessments which replaces the 24 month study that had been used in previous years. This enables the assessing office to more accurately determine assessments in a declining market. Because Grosse Pointe Shores is using the twelve month study the sales will not “lag” and the decline in assessed values will more accurately reflect true cash value of properties.
For 2011 Assessments, the 12 month sales study begins October 1, 2009 and ends September 30, 2010.