Your 2025 Tax Notice
Michigan Department of Treasury form L-4400
During February, property owners should receive annual property tax notices for Michigan properties. If the values are not challenged, they will become final for the 2025 Tax Year, and property taxes are calculated based upon the 2025 Taxable Values.
Assessed and Taxable Values
Both values are provided from the previous Tax Year as well as tentative values for this year, so a property owner can see any changes. The Notice of Assessment also provides a state equalized value which will almost always equal the assessed value.
The Assessed Value and Taxable Value serve different purposes:
· The Assessed Value equals 50% of what the municipality believes is the property's market value – called “True Cash Value.” If you sell your property, the Assessed Value usually becomes 50% of the sale price for the buyer.
· The Taxable Value is equal to or less than the Assessed Value. The tax actually paid by the property owner is calculated based on the Taxable Value.
Municipalities determine the value of properties each Tax Year as of December 31 of the prior year. For example, if the city or township assessor believes a property is worth $500,000 on December 31, 2024, the assessor sets an “Assessed Value” for tax year 2025, of $250,000, reflecting 50% of the property's market value or True Cash Value.
The Taxable Value will either be equal to or lower than the Assessed Value. In the year after a property transfers to a new owner, the Taxable Value is “uncapped” to equal the Assessed Value. In years that the property does not transfer, the Taxable Value will increase by the rate of inflation only, in general. When market values increase year after year, and a property does not change owners, it is common for the Taxable Value to be significantly lower than the Assessed Value.
The Taxable Value may also increase or decrease if there were significant changes to the property as of December 31 prior to the current Tax Year. For example, if a building was torn down, the property “lost” the value of the building. If a new building was constructed, the property “added” value. When there is a significant “loss” or “addition” to the property, present as of December 31, then the assessor may add value to the Taxable Value for an addition or subtract value from the Taxable Value for a loss. These additions or subtractions to the taxable value are independent of the calculation of the assessed value (which is 50% of the market value), except that the Taxable Value can never be higher than the Assessed Value.
“Principal Residence Exemption”
Homeowners should also review their PRE (Principal Residence Exemption) status on their Notice of Assessment each year. In Michigan, a property occupied as the property owner’s principal residence is exempt from up to 18 mills of tax levied by the local school district. When a property owner owns multiple homes, they may claim the principal residence exemption only on their principal residence. The Notice of Assessment states whether the property is 100% exempt under the principal residence exemption.
Calculating Property Tax
Property tax each year is calculated based on the taxable value. Each municipality imposes a different tax rate, called a millage. Rates differ by city and township because each imposes different mills for local services, such as, for example, schools, fire, police, and library. There are also mills imposed for County services and State education. The mills combined reflect the total annual millage rate imposed by the municipality. Each year, the city or township issues a summer tax bill due by September and a winter tax bill due by February of the following year. The total mills assessed are split between the summer and winter tax bills. The tax imposed on the summer and winter tax bills is calculated based on the property’s current taxable value which is reflected within the property’s Notice of Assessment, which is mailed to you in February.
Annual property tax is calculated as follows: taxable value x (summer millage + winter millage)/1000= Tax Paid in $.
Administration Fee
In addition to your property tax payment, there may also be assessed an additional 1% administrative fee (a percentage of the property tax you would pay).
How to Appeal Your Property Taxes
You must act ASAP to obtain a fair valuation of your property and lower your taxes.
Contact Attorney Tom Fredericks
Call (517) 655-4100 or notify tomfredericks84@gmail.com
