With a wealth of on line resources, a growing for sale by owner market, and countless educational TV shows, it is no wonder buyers may take a do it your self approach to home purchasing in Ann Arbor. But having access to data and correct interpretation of the information can be problematic.
When it comes to Ann Arbor Real estate taxes, knowing how the property taxes affect the home buying decision is important. For point of reference, we are linking the Washtenaw County millage rates
, Michigan Property Tax Calculation Explanation Video
, and property tax calculator to determine the probable future taxes on your next home. Future tax effect can impact your mortgage payments/ escrow account, so understanding this is important.
Take this example. Buyer bought new construction that was basically taxed on vacant land as of May. In July, the assessor thought the homes was basically complete and the builder was just delaying finishing until he secured the buyer, so they assessed it 80 percent complete. This assessment did not get reported until the Dec 1 tax bill was generated. The home was completed, the buyer closed last day of November and in December received their first tax bill of $11,000. The bill based on the June reported data should have been $6,000. This was a huge surprise to the buyers and their attorney.
This example was for a property in West Ridge
. The buyer was in the process of waiting for the mortgage financing approval. A new tax bill was issued to the Sellers and the taxes rose slightly. The extra tax amount made the buyer unqualified for the loan and the buyer had to walk away from the house purchase.
Understanding the difference between homestead and non homestead rate is important. If the Seller vacated the property and lost the homestead rate, the buyer could be the recipient of a future tax bill nightmare surprise. It is always wise for the buyer to check with the taxing authority to get confirmation on billing assumptions and calculations. When doing your real estate property search, just check this link to determine where the home is located and what schools the children attend.
Referring to the chart again;
If a home is in Lodi Township Ann Arbor Schools
, the homestead millage rate is 30.27 and if State Equalized Value – SEV is $100,000,00 the tax Estimated Property Tax For Primary Residence or Qualified Farm (Homestead) is $,3027.00
If a home is in Lodi Township Dexter Schools, the homestead millage rate is 31.22 and if SEV is $100,000 the tax Estimated Property Tax For Primary Residence or Qualified Farm (Homestead) is $3,122.00. Based on the home purchasing budget and federal and State tax write offs, this may or may not be important. Either way, having a professional guide you through the Ann Arbor Area home purchasing steps may prove invaluable. Consider your buyer agent an indispensable partner in the home buying process.
SEV (STATE EQUALIZED VALUE) – is 1/2 the market value the local assessor assigns your property. So if the the assessor thinks your house is worth $200,000 then your SEV would be $100,000. SEV is what the Washtenaw County local assessor thinks your house is worth. So just by multiplying the SEV by 2 will not give you what you can sell your house for or what it will appraise for.Your city or township assessor determines the State Equalized Value SEV based on a formula and other recently sold homes that are comparable. But remember when you get your tax statement that SEV is only what the city thinks it is worth not what your taxes are based on.
TV (TAXABL VALUE)When you buy a house, the next May the taxable value resets to equal the SEV. If you buy an Ann Arbor home in Sept. The current taxable value is 100,000 and the SEV is $150,000. Taxes are $2000. So next year at the beginning of May the SEV and taxable value will both become $150,000 (unless the city assessor raised the SEV). The State equalized value and taxable value becomes the same number. So in this example the taxes would go up to $3000 the following year.
So when you look at a property tax statement the main number you want to look at as a homeowner is the TAXABLE VALUE. That is the number you times by the millage rate to get the Michigan property number you owe.
TAXABLE VALUE X MILLAGE RATE = PROPERTY TAX OWED
Then after the first year taxable value resets the taxable value will go up the lesser of 5% or rate of inflation. But Taxable value can go down if SEV goes down to below taxable value or equal to taxable value. This can be complicated, so make sure you research your situation.
Weather you are looking for the best deals in Ann Arbor foreclosures, Ann Arbor Area short sales, horse properties, or perfect Ann Arbor Area subdivisions, downtown Ann Arbor by U of M Campus, call your Ann Arbor Real Estate Experts to find the perfect Ann Arbor home: 734-669-0337.