Your Taxable Value is another important value that is located on your Assessment Change Notice (the "This is NOT a Bill" document) & assessor record card. We know your SEV x 2 indicates what the Assessor beleives your property is worth on the open market, but what is the point of the Taxable Value? 

SEV IS GREAT, BUT TAXABLE VALUE IS WHERE IT'S AT

Your taxable value is complex and often a different value than your SEV. Your annual tax burden is calculated by multiplying your City or Township millage rate by your taxable value. If your taxable value is $100,000, and your millage rate is 50 Mills, your annual property tax burden is $100,000 x .05 = $5,000 per year in taxes. 

THE GAP BETWEEN TAXABLE & SEV

Many times, the taxable value is lower, sometimes much lower, than the SEV. This is because, the year following a transfer of ownership (the year you purchased the property is 2015, so the year following is 2016), your taxable value becomes capped. Property owners benefit from a capped taxable value in the long term, during markets that are increasing in value. For example, if you purchased your property in 2014 then your taxable value was capped in 2015, and you probably benefited in 2016 because the SEV increased beyond the rate of your taxable value. It's confusing, but read on my friend!

STATE EQUALIZED VALUE DOES "X", TAXABLE DOES "Y"

The Assessor can increase your SEV by + 10%, or +15%, whatever increase they can support using market data, and your Taxable value is capped. Taxable values can only increase by the CPI or 5%, whichever is lower. This happens every year.

I HAVE A GAP, IS MY ASSESSMENT FAIR? 

I receive a lot of phone calls from clients who can't beleive their assessment indicates their property is worth $1,000,000 (so the SEV, at 50% would be $500,000). They have owned their property for a few years, and there is no way they could sell the property for $1,000,000. When we dig one layer deeper and find that the Taxable value is only $400,000, we discuss that in order to impact the client's annual property taxes, we would need to argue for a value below $400,000 x 2 = $800,000 in order to save them money. So, even though the property is valued at $1,000,000, the property owner is paying taxes as if the value was $800,000. Of course, the client would never think of selling their proeprty for only $800,000!

Do you have questions on the valuation of your property? Contact me for a no obligation conversation.