Southeast Michigan Home Buyer- How to Calculate Your New Property Taxes
Right now in Oakland and Lapeer County Michigan many houses are assessed higher than their true market value. Many home buyers are under the false assumption that they will only be stuck with that tax for the first year. That the new assessment will be half the sale price. This is not correct!
When I show you houses, one of the sheets attached to the listing is the public record report for the house that is available through our 
MLS. This public record sheet (or PRD) will give the taxable value and the state equalized value as well as the annual tax amount.
The taxable value is the number used to calculate your taxes. The taxable value times the millage rate equals your annual tax bill. Upon transfer of deed (sale) the SEV will become the new taxable. In this market there's a good chance the SEV will be higher than half the sale price.
I showed a house the other evening that is listed for $278K. The SEV and the taxable are both $163,610. Multiply that by 2 and you will be taxed like your house is worth $327,220. That is going to make a difference on your monthly payment.
This isn't to say your assessment won't drop next year- state law states that the assessed value is to be one half of the assessor's estimate of market value of your property, and that the taxable value has to be less than or equal to the assessed value. And once ownership is transferred, and a new taxable in place, that taxable value is capped at 5% or the rate of inflation- whichever is less.
Many townships are dropping assessments across the board. The house in the above example was assessed at $198,670 in 2006 and has dropped each year since. You may also fight your assessment through your township and appeal to the state if you are not satisfied with the results.
For the purpose of determining what your costs will be when purchasing a home, you should figure the worse case scenario and figure your new payments based on a tax amount that uses the SEV plus 5%. When your taxes end up lower- treat yourself! Or put it against the principle of your house.
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