Taxable values. Assessments. Millage rates. What do they mean? More importantly, how do they relate to residential property taxes?
In Michigan, assessments are placed at 50% of market value. Calculating those assessments is the responsibility of either the local municipality or the Ottawa County Equalization Department (who provides this service on behalf of some local municipalities). Assessors review properties to ensure accuracy of data on the assessment roll.
What determines whether my assessment increases? Township or city assessors place assessments on every property in their jurisdiction based on sales of like properties. To aide assessors in this and to confirm assessments are placed uniformly, the Ottawa County Equalization Department analyzes the real estate market using sales and appraisal studies every year to determine how much classes of property should change to match the market. Equalization safeguards fair and equitable assessments across the entire county.
What about taxes? How much property tax you pay is based on your taxable value and your millage rate. Your taxable value is calculated from the initial purchase price of your property. In the year following the transfer of ownership, your taxable value is set to your assessed value. Each year thereafter it may increase by the lesser of 5% or the rate of inflation (absent any new construction on the property). In areas where property values are increasing quickly, a property’s taxable value will frequently lag behind its assessment.
Calculating your property tax bill is not complex. The equation to determine your tax bill is: taxable value x millage rate ÷ 1000. For math challenged folks, rest assured your tax bill does this for you. For those interested in digging in further, you can use the formula to compute how much of your bill goes to your local library, school district, and to all the other public agencies. Incidentally, residents will be happy to learn that Ottawa County boasts the sixth-lowest millage in the state.