The only sure things in life are . . .

Dated: March 20 2024

Views: 190

Taxes. We are going to talk about taxes, not the other thing.  

Specifically, let's investigate how property taxes are determined. I will be drawing insight from the wonderful Bear Creek Township Supervisor, Denny Keiser. He also serves as the Assessor for the township. He loves his community and the service that he has given for over 30 years is nothing less than outstanding. As a resident, I have experienced firsthand how valuable his dedication and wisdom have been in leading our township. He recently created a memo explaining the mysterious process of determining property taxes. It is the best that I have encountered, so I want to share highlights from it with you. Please contact me or Supervisor Keiser for the entire memo (Contact info is given at the end).

First, some basics. "Assessed values" are what your local Assessor reviews annually. These are adjusted to reflect the current market values. This tedious task uses the sale prices of the previous 2 years to indicate the market trend and state. The more sales that have occurred, the more data is available to generate a picture of the current market. As Supervisor Keiser states, "This year we had numerous sales to review for the sales study." This holds true for the most recent assessments no matter what area you live in. 2020-2022 were wild!

Now for the second part of the two-part property tax system: "Taxable value".  Again, Supervisor Keiser says it best, "The taxable value (which we pay taxes on) is a separate formula that has NOTHING to do with the current housing market . . ." This is calculated by using the value as of 1995. The value then moves up or down using the Consumer Price Index rate, not to exceed a change of 5%. "This year's calculated CPI was 7.9% but was capped at 5% and is applied to everyone's taxable value in Michigan and isn't subject to the assessor or Board of Review to change.", explains Supervisor Keiser. So, the taxable value changed for every property owner in Michigan. We all felt this moment as it is the largest value jump that many of us have ever experienced. The voters chose this system with Proposal A way back in 1994. I am grateful for the cap.

Now comes the interesting part for property Sellers and Buyers. Following the sale of real estate, the local assessor can change the taxable value. This is the only exception that uncaps the tax amount. This is sometimes referred to as a "pop-up tax". If there was any addition to or deletion from a property, it can now affect the taxable value directly. I will let Supervisor Keiser tell us, "The taxable value can never exceed the assessed value so now and into the future the assessed value will be more than the taxable value. Right now, property values are the highest that they have ever been but appear to be leveling off again for 2023."

This leveling off of the market is far more comfortable for both Sellers and Buyers. We are leaving the wild ride that we have been on and getting back into familiar ways of proceeding. As the old saying goes, the only sure things in life are death and taxes. Personally, I think that the only sure thing is change. We face it every day. Knowing that someone like Supervisor Keiser has my back as a resident of his township through the integrity and expertise that he gives to his work, helps me feel better about those tax changes. I hope this explanation of how our property taxes are formulated is helpful to you.

Before I go, let me encourage you to get involved with your local government. There are some awesome people working together for their neighbors. Yes, there may be some different ideas or perceptions on how to approach our future, but until we all get together and listen to each other, set goals, and work together, we won't really have a community.

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Donna Lively

Why do I work in the real estate business? What a question! I enjoy "Helping to bring the right people to the right place at the right time". (My motto). I find that real estate is about change and c....

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