State Test Flashcards
Acre
LAND = 43,560 Sq. Feet
Additions - Which value does it affect and definition
- Taxable Value
The change in capped value that occurs as a result of: - physical change of the property.
- The inclusion of previously omitted property.
- Recognition of previously exempt property.
Adjustment
Positive or negative change made to the equalization process.
Approaches to Value
1 - Cost Approach
2 - Sales Comparison
3 - Income Approach
Assessable
Subject to tax, charge, or levy (all property; real and personal)
Assessed Value (AV)
The monetary amount at which a property is put on the assessment roll.
Assessment Roll
The public record of the assessed values and properties prepared by the assessor. Includes:
- Parcel No
- Ownership
- Descriptions
- Assessed and taxable value
Assessors Manual;
How many volumes and what do they contain?
Volume 1 - Cost data for residential and MOST agricultural structures
Volume 2 - Cost data for commercial & industrial structures, and some agricultural structure
Board of Review
Examines and reviews the roll for the current yea prepared by the assessor.
- Adds property previously omitted
- Corrects errors in name, descriptions, assessment & valuation
- Hears taxpayer appeals
- Endorses completed assessment roll
Bundle of Rights
Sell Lease/Rent Use Give away Enter/Leave Refuse to do any of these
Capped Value
Capped Valued =
(prior yrs TV - losses) X (The lower of 1.05 or inflation rate) + additions
County Equalization
County examines assessment rolls of cities and townships to determine that each class of real and personal property has been equally and uniformly assessed at a level of 50% TCV.
Cost Approach
Estimates the cost of constructing improvements to the land based on the principle of substitution.
Replacement cost of new - deprication + land value
- Use when there is not sufficient sales, new construction, or mass appraisels
Disabled Veterans Exemption
100% property tax exemption for disabled veterans and their unmarried surviving spouses. - Must own home - Homestead 3 Requirements: 1. Permanently & totally disabled 2. Specially adapted housing 3. Individually unemployable
Exempt Poperty
Explicitly recognized poperty that is not subject to taxation:
- Real Estate must be owned and occupied by the exemption claimant
- Claimant must be a library, benevolent, charitable, educational, or scientific institution
AND 3. The exemption exist only when the property is occupied for the sole purpose for which it was incorporated.
Headlee Amendment
Tax limitation amendment to the Michigan Constitution:
- Prohibits states from reducing its share of existing state-mandated programs and requires the state to reimburse local governments for any new mandated programs.
- Prohibits state from reducing the proportion of total state spending paid to all units of local government as a group below the proportion in effect in the fiscal year.
Income Approach
Used to value the income stream of property.
- Current value is directly linked to the property’s ability to render income in the future.
Loss - Which value does it affect and definition
AV
Assessment decreases resulting from reduced tcv because property was removed
1. assessment
2. property was destroyed or became exempt
3. property was removed from a parcel description
Losses - Which value does it affect and deifinition
Capped Value
Capped value reductions for property:
1. Destroyed or removed
2. That has become exempt
3. Decrease in value due to a decrease in occupancy rates
4. Decrease in value due to environmental contamination.
Market Value
Most probable sale price of a property in terms of money in a competitive and open market.
Michigan Tax Tribunal
The tribunal is an administrative court that hears tax appeals for all Michigan taxes.
New - Which value does it affect and definition
AV Increased assessment changes for reasons other than recognition of the result of the current equalization study: - Physical Changes - Changes in taxable status - Increase in market value
Omitted Property
Property that should have been assessed on a previous assessment roll but wasn’t.
Personal Property
Consist of every kind of property that is not real property, movable without damage to itself or the real estate;
- Tangible - Equipment
- Untangible - Financial Assets
Principal Residence Exemption
Exemption, up to 18 mills, of local school operating taxes given to the property that is the primary residence of the owner.
Property Classification
All tangible property divided in class depending on the CURRENT use of the property:
- Agricultural
- Commercial
- Timber-Cut Over
- Developmental
- Exempt
Property Transfer Affidavit
Form must be filed whenever real estate or some types of personal property are transferred.
- Must be filed within 45 days
- $5/day up to $200 penalty
- Must be completed even if you don’t register the deed.
Real Property
Ownership of land and anything permanently attached to the land.
- Consist of interest, benefits, and rights
State Equalization
State Tax Commission is required by law to examine rolls filed by each county and must determine whether the value of each CLASS is greater than, less than, or equal to 50% of the CLASSES tcv.
State Equalized Value (SEV)
Assessed value that has been adjusted by the direction of county and state equalization.
County Board of Commissioners and Michigan STC must review and adjust local assessments to meet constitutional threshold of below 50%
State Tax Commission (STC)
3 member appointments by the governer. STC has general supervision of the administration of property tax laws.
Taxable Value
Lesser of capped value or SEV (TV is tentative until STC adopts final equalization in may.)
-Can only increase by rate of inflation or 5%, whichever is less.
Transfer of OWnership
A conveyance of a title, or a present interest in, property is a transfer of ownership.
-Transfer of ownership only occurs when the taxable value is uncapped.
True Cash Value
The usual selling price at the place where the property is at the time of assessment.
- TCV and Market Value are not the same.
Uncapping
Under Prop A, the year following the transfer of ownership a properties taxable value is uncapped equal to the assessed value as calculated for that year.
Tax Day
December 31st
Deadline for taxpayer to file PERSONAL PROPERTY statement with assessor.
February 20th
Day assessment roll should be completed and certified by assessor
First Monday in March
BOR organizational meeting where assessment roll is given to board to review.
Tuesday AFTER the first Monday in March
BOR to begin hearing appeals
2nd Monday in March
BOR completes review of appeals
On or before 1st Monday in April or 10 days after the board closes
Assessor delivers completed roll with board certification to County.
Wednesday following the first Monday in April.
Deadline for filing PRE affidavits.
June 1st or November 1st
Deadline for classifcation appeals to the STC.
- Must appear before board
June 30th
July BOR
Tuesday after the 3rd Monday in July
Prop A
Authority of govt. to levy taxes written in State CONSTITUTION that states all proerpty should be assessed uniformly and shall not exceed 50% of the TCV.
- Caps taxable value
What is subject to taxation?
All property, real and personal, unless explicitly exempted.
Headlee Tax Limitation
*1st successful amendent to constitution re taxes
- State must maintain proportion of Spending
- Prohibits state from imposing new mandates on local govt unless they fund it.
- Prohibits local units from imposing new taxes, raising new taxes, or bonding general obligation with voter approval.
- Limited local tax revenue growth in assessed values that exceed the general price level of the previous year. (applying millage rollback fraction)
Taxable Value Formula
TV x Authorized millage rate = property taxes
SEV Formula
- Prior YR TCV + Market Value Increase = Current year TCV
2. TCV/2= Current year SEV
Capped Valued Formula
(Prior year TV - Lossess) x IRM + Additions = Capped Value
How should legal description/maps be read?
Backwards
What are the different ways to describe property?
- Rectangular survey or acerage
- Metes and Bounds
- Platted and recorded
How large is a section?
640 Acres
In order for a property to have value, it must have the following:
DUST
Desirability
Utility
Scarcity
Transferability
Real Estate
Physical land and any structure attached to it.
Real Property
Refers to the bundle of rights enjoyed by the new owner of the real estate.
Personal Property
Includes movable items not permanently attached to real estate. Consider the following:
- The manner in which it is attached
- The intention of the installer - to permanently attach or eventually remove
Purpose for which the premises are used.
Rights of Ownership removed by government?
PETE
- Police Power
- Eminent Domain
- Taxation Power
- Escheat (owner dies w/out legal heirs)
10 Basic Economic Prinipals of Appraising
- Supply and Demand
- Change
- Contribution
- Competition
- Conformity
- Anticipation
- Substitution
- Surplus Productivity
- Dminishing Returns
- Highest and Best Value
What are the approaches to value?
- Cost
- Sales Comparison
- Income
Sales Comparison Approach
Comapres the property being appraised to similar properties that have recently sold.
Superior Home/Area (-) adjustment Subject Property -------- Inferior home/Area (+) adjustment
When are tax bills sent?
June
What are the 2 limits to taxable value for each property?
- Constitutional limit that TV cannot exceed 50% of TCV
2. That annual rate of increase in taxable value may not exceed the lesser of 5% or the annual increase of inflation.
All values are tentative until…
… until the STC adopts final equilization in May
The assessor has the authority to change the value in 2 circumstances:
- If the unit receives a County or State Equilization factor that is more or less than the tentative factor.
- If a transfer of ownership is rcvd after the adjournment of the MBOR and the taxable value has not been uncapped due to not having a PTA
The assessor determines the following 3 things:
- The assessed value (50%)
- The capped value (using formula)
- The taxable value (lesser of AV or capped)
When are assessors required to send out assessment change notices to taxpayers?
14 days prior to the first meeting of the BOR
What are the 3 statutory functions of the BOR?
- MBOR to examine and make corrections to current assessment roll.
- BOR serves as an appeal board hearing protests from property owners re assessment established.
- BOR may meet in July and Dec to accept & approve corrections, denials of agricultural appeals, and poverty exemptions
BOR Requirments
- 18 Years old
- US Citizen
- At least 30 days of residency
- 2/3 must be property owners
- 2 years terms beginning 1/1 on odd years
BOR burden of proof during appeals?
The burden of proof lies on the taxpayer.
Requirements of field inspections
- Verify ownership
- Record address
- Verify property classification
What should assessors refer to when assessing property in the State of Michigan?
Utilize the official assessment manual
Min Record Card Requirements
Front
- Owners name and address
- Unit of govt - city, township, village
- Real Property Description
- Parcel No.
- Address
- Public Improvements
- Land Value Calculations
- Land Improvements Calculations
- Building Value
- Total Value of the Property
- Assessment Hx
- Examination Date
Back
- Year built & remodeled
- exterior wall type
- basement/ crawl space
- basement walls
- basement finish
2 Sections of Assessment Card
- Description of property
2. Pricing of the various components
Guiding Prinipals of Taxation
- In general, tax laws are construed against the govt.
2. Tax exemption statutes are strictly construed in favor of the government.
Qualified Agricultural Exemption
Provides an 18 mill exemption from local school operating millages.
- Owner may apply to prevent uncapping upon transfer of ownership
1. The property remains Qualified Agricultural Property AND
2. The new owner files form 3676 with the assessor and register of deeds w/in 90 days.
How can a property be qualified for an Agricultural Exemption
- Be qaulified as agricultural OR
2. Devotion of more than 50% of the average to agricultural use.
What are the types of Real Property Classification?
- Agricultural
- Commercial
- Industrial
- Residential
- Tumber Cutover
- Development
What are the types of personal proeprty classifications?
- Personal
- Agricultural
- Personal Commercial
- Personal Industrial
- Personal Residential
- Personal Utility
Who determined qualified forest exemptions?
Dept of Agriculture and Rural Develoment
Are personal property Statements public record?
No, the statements are confidential.
How are persoanl property values determined?
Original cost + Installation + Sales Tax + Freight
Small Business Tax Pary Exemption Form No.?
Form 5076
Requirements for Small Business Exemption
- Classified as industrial personal property or commercial personal property.
- Less than 80K/ year in revenue
- No being leased or used by previous owner
Each assessment roll must have the following columns:
- Name and address of owner or occupant
- Property Description; Parcel No., School District Code, classification
- Assessors Valuation
- BOR valuation
- MTT or STC valuations
Each Tax Roll should have the following columns:
- Property Owner/Agent Address
- Property Description; Parcel No., School District Code, classification
- Assessed Valuation
- SEV of Property
