Although many properties have increased in market value (as shown by the difference in the assessed value), most properties will not pay anymore than the rate of inflation as set forth by the State of Michigan. This limit on the taxable value helps keep tax bills from growing faster than inflation.
As we see increased land and building values making the assessment figure grow, Proposal A limits the growth of the taxable value to the lesser of 5% or the rate of inflation. The exceptions to this are: when there are voted tax rate increases, new construction (not repairs) on properties, and a sale or transfer of ownership of properties.
An assessment may have changed due to a number of factors, ranging from rising sales prices of land and buildings to recognizing differences on our records from past years. Most remodeling is exempt from additional tax. Some properties have been remodeled or changed and is worth more than was previously believed. The assessed value will have increased, but the taxable value is still limited to the rate of inflation.
20% of the homes in the city are assessed individually each year. There may been have a larger than normal increase if the property was re-appraised.
To explain the Notice of Assessment form, which is mailed to every property each year, look at the figure on Line 1 under the word CHANGE. It is that amount which is multiplied by the current tax rate that will determine how much additional tax will be paid.
Dowagiac School District homeowners pay about $38 per $1,000 of taxable value. If Line 1 Change amount is $1,000, then the tax bill in December will be about $38 higher than last year's tax bill. If the Change amount is $400, then the December bill will be about $16 higher, and so on. Non-residents and properties not 100% homestead pay an additional $18 per thousand on their bills.
The assessment figure and taxable figure are basically independent of one another. One shows a figure that is computed as half of the property's value (assessment) and the other figure (taxable value) is just the 1994 assessment factored up for inflation. This is why there is a gap between the two amounts in most cases.
People often ask the assessor, "since the assessment isn't used for taxes, why bother raising it?" The answer is that the Law requires assessments to be kept at 50% of market value and if a property is sold, the new taxable value is computed using the prior assessment figure. Therefore, assessments must be kept up to market levels so revenue is not lost to local schools and governments as time passes. It should also be noted that the assessment figures are used by bankers and realtors to determine values-a good thing to remember if you apply for a home equity loan.