The annual Notice of Assessment
The Notice of Assessment holds vital information for the property owner.
While property taxes are a vital source of revenue to pay for local government services, very few property owners are excited to receive their summer and winter tax bills each year. While these bills provide a great amount of information regarding the property’s value and taxability, the tax bills are not the first notice that a property owner will receive. In anticipation of the annual Board of Review (BOR) process, local assessors are required by the General Property Tax Act to send a Notice of Assessment, Taxable Valuation and Property Classification to the property owner before the BOR sessions begin. So what is this Notice of Assessment?
Commonly called the assessment change notice, this Michigan Department of Treasury form clearly states at the top, “THIS IS NOT A TAX BILL”. Even though the notice is not a tax bill, a property owner should not minimize the important information to be found on the notice. The assessment notice provides the property owner, in many respects, his or hers only opportunity each year to appeal the assessed value for their property. Let us look at the highlights of the notice.
The Notice of Assessment, Taxable Valuation, and Property Classification is just that. The form provides the annual notice from the local township or city assessor to the property owner of the current year’s assessed value. The prior year’s value and the amount of the change will also be noted. It is important to remember that the assessed value (AV) as well as the state equalized value (SEV) represents 50 percent of true cash or market value. These values may go up, go down or stay the same from one year to the next and is based upon a local sales study of property in the same classification (i.e. agriculture, commercial, industrial, or residential).
The taxable value is a calculation required by the adoption of Proposal A in 1994. Increases in taxable value are limited to the annual inflation rate multiplier / consumer price index as calculated by the United States Department of Labor Bureau of Statistics. The taxable value may increase more than the inflation rate multiplier due to physical changes to the property. A taxable value may also increase the year following a transfer of ownership. This is called uncapping and as a result, the taxable value would change to an amount equal to the assessed value for that year.
The classification is how a property is used. In other words, is the property used as residential such a principal residence for the owner or possibly a single-family rental, as a business or commercial or in the manufacturing of a product or some other industrial use? These uses are defined in the General Property Tax Act and the assessor must classify each property according to its use each year.
In addition to providing this information on any changes in assessed or taxable values as well as a property’s classification, the Notice of Assessment informs a property owner of any exemptions that may be currently in place for the property. However, most importantly, the notice informs the property owner of the dates and times of the Board of Review. If a property owner is not satisfied with the information on the notice, the March Board of Review is the owner’s opportunity to appeal such matters to the local Board of Review. Detailed information on your local unit’s Board of Review may be obtained by contacting your local assessor’s office.
While the Notice of Assessment is certainly not a tax bill, the information contained in it will go a long way in determining the amount of property taxes that will become the summer and winter tax bills. Property owners should review their Notice of Assessment carefully each year, as the March Board of Review is an owner’s opportunity to appeal. The Board of Review only may hear valuation appeals for the current year. Once the current year board adjourns, appeal rights also close. Therefore, property owners should carefully review their annual assessment notice and not miss this annual appeal process.