Property Taxes in Michigan
Property taxes have existed for over a century in Michigan. Every year, real estate owners need to pay a percentage of their property’s taxable value. Local governments also apply this tax to some business equipment and other commercial or industrial assets.
Property Tax Rules
Taxation rates vary considerably from one city to the next. They must include certain statewide taxes, such as the 0.6 percent State Education Tax. Since 1994, Michigan hasn’t allowed taxable real estate values to increase more than the official inflation rate or 5 percent each year.
Although cities need to establish separate taxable values to prevent taxes from rising too quickly, they still keep records of assessed values. The annual tax might increase when someone sells real estate. This happens because the taxable value becomes equal to the assessed amount.
Local assessors may utilize income, market or cost valuation methods. The state government approves manuals that help them use the cost approach. This common technique involves estimating the value of the land, adding the expense to construct buildings and subtracting depreciation.
Assessors in Michigan often apply the market valuation procedure to real estate that lacks buildings. They estimate values by looking at the selling prices of equivalent properties. Officials also frequently employ this method when owners appeal their tax assessments.
Property Tax Revenue
The Tax Foundation reported that approximately 53 percent of Michigan’s property tax revenue came from industrial and commercial properties in 2010. However, this figure fell to only 31 percent after four years, according to MLive Media.
Property Tax Changes
During 2014, voters approved an important proposition. It raised the property tax exemption on business equipment to $80,000 and excluded new assets. Michigan’s government promised to compensate for reduced local revenues by supplying cities with additional state funds.
Property Tax Rates
Taxation rates have continued to rise even as many Michigan towns and cities report falling revenues. The 2008 recession caused local governments to lose major sources of income. Detroit has higher commercial rates than New York or any other U.S. city, according to NPR.
At the same time, Michigan’s largest city offers substantial abatements for technology firms and some industrial enterprises. The state government provides exemptions to commercial and industrial taxpayers who restore decaying facilities or establish businesses in areas with struggling economies.
If you receive an exorbitant property tax bill, the experts at Assessment Technologies may be able to assist you. We perform realistic valuations and help owners cut their taxes by disputing high assessments. Our company has nearly three decades of experience in this field. To learn more, please register for your FREE consultation today.
Michigan Property Tax Resource: website