Lapeer County Treasurer’s office offers advice to taxpayers
I was quite upset by Alex Lengemann's advertisement in the January 9, 2008 edition of the Tri-City Times. As someone who has worked with property valuation and taxation for the past 16 years, I would like to clarify some of the statements in the advertisement. I would hate for our residents to be confused, or to spend their hard-earned money unnecessarily.
Mr. Lengemann commented that while property values have decreased, taxes have not. That is because, since the passage of Proposal A in 1993, property taxes are not directly based on property value. Every property in Michigan has both a Taxable Value (TV) and an Assessed Value (SEV). Both values are shown on your Assessment change notice and tax bills. There is a very important difference in those two values. The SEV can vary widely from year to year. It is approximately 50% of the true market value of your property or about 50% of what the assessor estimates your house would sell for. But, very significantly, you do not pay taxes based upon the SEV. A decrease in your SEV does not decrease your taxes.
The TV is a capped or restricted value. It can only increase from one year to the next by the rate of inflation or 5%, whichever is less. Since 1995, the annual increase has never been as high as 5%. The TV can never be higher than the SEV. The TV remains capped until the property is sold. In the year after a sale, the TV rises to the level of the SEV; then the cap goes back on. Property taxes are based upon the TV not the SEV.
For those of us who have lived in our homes for many years, the difference between the two values can be very large. So, even when the property value falls, the SEV may not decrease to the level of the TV. Here are real numbers from a property in Lapeer County. The homeowners purchased the house in 1990.
In 1995, the first year Michigan had both SEV and TV, the TV was $42,784 and the SEV was $45,700. By 2005, the SEV had increased 117% to $99,300, but the TV had only increased 27% to $54,379. For the past two years, property values have decreased in this part of the County. The SEV is now down to $71,664, and although the TV has continued to increase by the rate of inflation, at $58,251 it is still lower than the SEV. As a result, the homeowners' 2007 taxes will be higher than their 2006 taxes. In order for their tax bill to decrease in 2008, the value of the home would have to drop another $27,000. I'm sure they are hoping that won't happen.
So, for the many residents who have lived in their homes for many years, decreasing property values will not bring decreasing taxes. Although it may not seem fair this year, many of us should be very glad that we were not paying taxes for the past 10 years on our SEV. We would have paid thousands of dollars more than we did. Using the example above, even with decreasing values, in the past three years alone this homeowner's bills would have been over $4,000 more.
Until the last few years, for most properties the gap between the SEV and TV has increased every year. Thus, the longer you have owned your property, the wider the gap. For residents who purchased property more recently, you may see a decrease in your taxes. Your SEV may decrease to the point that it reaches, and decreases, your TV.
I would suggest that taxpayers look at the tax bill they received last December. It shows their 2007 TV and SEV. Look at the SEV. Do you believe your home is worth double that amount? Look at the gap between the SEV and TV. In order for your taxes to decrease in 2008, the value of your property would have to drop double the amount of that gap. Do you think it has?
If you think your SEV is too high, call the township or city offices and meet with your assessor. Many assessors work one or two days in each unit, so it is best to call and make an appointment. It is the assessor who sets the SEV for all properties in the township or city. He or she will gladly meet with you, review your assessment card and talk about how your property is valued. If you think there are errors on the card, ask them to visit your property. The more information the assessors have, the more accurately they can do their jobs.
If you want to see the assessments for other properties in the township or city, go into the office and look. Assessment cards and rolls are public information. You are free to study them at no cost. You can get copies of your assessment card, as well as those of other properties at no cost or for a nominal copying fee.
In February, you will receive an Assessment Change Notice from your township or city. Look it over carefully. It contains important information concerning your 2008 taxes. Look at the SEV. It should be about 50% of the amount for which you would sell your property. Look at the Principal Residence Exemption (PRE) percentage. If you live on your property, if it is your permanent residence from which you vote, pay your income taxes, have your driver's license—you should have a PRE. (Note: it used to be called the homestead exemption). If you think the PRE percentage is wrong, call your assessor.
If you disagree with the SEV, or have any other questions, call and make an appointment to meet with the March Board of Review. The Board of Review normally meets during the second week March. The dates and times of the meetings are on your Assessment Change Notice. It costs you nothing to go to the Board of Review.
While I disagree with much of Mr. Lengemann's advertisement, he is correct in stating that the only time to appeal your SEV is at the March Board of Review. If you have questions, meet with them. The Board of Review consists of local residents who have been sent to specific training in order to do their job fairly. In addition, in many units the Assessor or the Assessor's assistant attends the meetings to act as a resource for the Board.
If you have questions, you can also call your township or city Treasurer or my office at 810-667-0239. If you have trouble getting through (with one incoming line, it is frequently busy), email your questions to me at email@example.com. We will do whatever we can to help you.
The process may sound confusing or intimidating, but you can understand it. I know every treasurer and assessor in this county. They will all help you and answer your questions. And, unlike what you've heard about higher levels of government, we all work together! So if one doesn't know the answer, they'll know where to find it.
I understand that money is tight. We work for you already. Let us help you. And we won't charge you $150.
Sally W. Eilersen, Lapeer County Treasurer
January 16, 2008