2023 Property Tax Increase Thanks to Inflation
5% Taxable Value Increase in 2023
Inflation is increasing every taxable home value by 5% in Michigan. This is the highest increase in 28 years. Traditionally the Taxable Value fluctuation follows the inflation rate multiplier from September-October of the prior year. In Michigan, Proposal A caps the maximum increase at 5%. Without this cap the increase would have been a staggering 7.9% for 2023 property taxes!
Understanding your assessment notice
You likely received a letter in the mail that states “THIS IS NOT A BILL”. Don’t ignore this assessment notice or you won’t be prepared for the increase on your July Summer tax bill. Your property taxes are always based on the taxable value, this is the important number to look at on your notice. The taxable value is dependent on where you live and the millage rate.
A few factors that may change the taxable value
If you have purchased a home or had a major construction project last year then your taxable value will likely increase more than 5%. However, even if you did not buy, sell, or renovate your taxable value has increased by 5%.
New homeowners need to understand why their taxes increase the year after they purchase a new home. When a property transfers ownership, the rules change. The following year the taxes “uncap” which means the new taxable value becomes the same as the state equalized value (SEV). This can significantly increase the new owner's property tax liability if the previous owners had lived in the home for an extended amount of years. Future "uncapped" taxes can be estimated by calculating the SEV with the millage rate.
Remember, in Michigan you can only receive one principal residence homestead exemption. If you own a second home, investment property, or commercial property then you are taxed at a higher millage rate.
Mistakes can be made during the assessing process so always be sure there are no discrepancies with your property details. Outside of the 5% increase, if you don’t agree with your taxable value then the only way to appeal your property taxes is in front of your local board of review in March.
Indicators for the future
Although none of us can predict the future, indicators are pointing to another increase of 5% for next year’s property taxes. So far the inflation rate has been over 5%, with the consumer price index rising by 6.4% for the 12 months ending in January.
If you're curious on what an increase can do to your future taxes or if you want to know the "uncapped" value, reach out to us so we can caluclate your estimate.