How to Understand Your Property Tax Assessment

THIS POST HAS BEEN UPDATED IN A MORE RECENT ENTRY. PLEASE CLICK HERE TO VIEW THE NEW BLOG ENTRY -> /2010/02/how-to-understand-your-leelanau-county.html

(Part 1 of 2)

Every year, typically during the last week of February you will be mailed your new notice of assessment informing you of your updated State Equalized Value and Taxable Value. This is sent to all property owners in the Grand Traverse Region.

State Equalized Value (SEV): The dollar value of an asset assigned by a public tax assessor for the purposes of taxation.

SEV x 2 = The Township Assessors total value for your home and/or property.

Taxable Value: The dollar value established for property tax purposes.

Taxable Value x Your Township Millage Rate = 2009 Tax Bill

Why are these numbers different?
-In 1994 Michigan passed Proposal A creating a new standard in which your property tax would be calculated. The taxable value of a property can only increase by the lesser of 5% or the rate of inflation. In recent years inflation has been under 5% so your tax bill would increase yearly by that rate. Property values had continued to soar and appreciate above the rate of inflation. This created a gap between your State Equalized Value (no increase ceiling per year) and your Taxable Value (no more than 5% increase).

Why is my tax bill still increasing during this downturn?
-Today, most appreciation in Leelanau and Grand Traverse Counties have flattened so you won’t see your SEV continue to soar at high percentages from year to year like in the past but there is still that issue of the gap between the two. This is why you will see your tax bill continue to increase every year (by the rate of inflation or 5%, whichever is less) until your Taxable Value = Your State Equalized Value. If we were still paying taxes like before Proposal A, your current taxable value would already equal your SEV (Proposal A has saved you money). The only alternative is appealing and reducing your SEV below your Taxable Value to see any money saving benefit. I will highlight the procedures for this in a later post.


Written by Jonathan Oltersdorf


History of Mortgage Rates


As you can see by the graph I created above, average national interest rates last week were at historical lows of 4.97% for a 30-year fixed rate. In light of yesterday’s inauguration and just for fun I split the years up into red (Republican President in office) and blue (Democratic President in office).

*This information was gathered from various sources and every attempt for accuracy has been made but cannot be guaranteed.

-Jonathan Oltersdorf

The Grand Vision, Future of Growth in Our Region

The Grand Vision is a $1.3 Million study to develop a growth plan for the future of our region consisting of Antrim, Benzie, Kalkaska, Leelanau, Grand Traverse and Wexford counties. The study has been ongoing for over 2 years, and the results are due to come out within the next month. You can view the extensive Grand Vision website by going to the link at the bottom of this post. Their site has tons of information and data and I have linked to a video below describing the process. I will post an entry on the results as soon as they become available.


“Our region has experienced an explosive 26% growth from 1990-2000, and it is anticipated that we will double today's population within 40 years - making this the fastest growing region in the entire Midwest. Experts analyzing volumes of public input from the recent Grand Vision Decision have identified key trends and areas of consensus emerging. The results are based on a preliminary analysis of more than 12,000 Grand Vision scorecards that were submitted by people in the six-county region. Almost one in 10 people across the six-county region took the time to share their ideas and priorities for shaping the future of the area”

Source: http://www.thegrandvision.org/

2008 Sales Data


The 2008 sales data has been calculated! I have created a chart below for you to compare the Leelanau County and Grand Traverse County real estate home sales for 2006, 2007, and 2008.

CountySold HomesDollar VolumeAverage PriceMedian Price
2008 Leelanau 210$77,263,117 $367,920 $266,500
2007 Leelanau277$98,524,539 $355,684 $235,000
2006 Leelanau 239$90,607,389 $379,110 $270,000
2008 Grand Traverse994$180,780,041 $181,871 $146,500
2007 Grand Traverse1,078$223,196,548 $207,047 $164,900
2006 Grand Traverse1,189$250,110,381 $210,354 $169,000
This report is based upon sales information obtained from the Traverse Area Multiple Listing Service from January 2006, through December 2008. Undisclosed sales are not included in the data.

As you can see from the results above, Grand Traverse County has been decreasing in all major categories throughout the past several years. Much of this is due to the drastic increase in foreclosures throughout GT County. Leelanau County has had a relatively low amount of foreclosures compared to surrounding counties (only 32 in 2008, 15% of homes sold). EDIT: Antrim County had 63 foreclosures and 202 total sales (31% of homes sold). Grand Traverse County had 261 foreclosures and 994 total sales (26% of homes sold). The results in Leelanau County are intriguing as average sale price as well as median price has both increased from 2007 to 2008 while dollar volume and number of homes sold has decreased. If you have any questions regarding this data, please contact Jonathan or Vicky Oltersdorf and we would be more than happy to discuss it with you!

3 Tax Saving Opportunities!

Welcome to 2009. I have gathered a list of important 2008 tax issues that everyone should be aware of.

1) First Time Homebuyers $7,500 Tax Credit

Legislation passed in 2008 allowing for first time home buyers to receive up to $7,500 tax credit for a home purchase between April 9, 2008 and June 30, 2009 (A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS) Of course this will have to be repaid to the federal government over 15 years. It acts more like an interest free loan which can be very beneficial for new homeowners or young couples just starting out! There are several guidelines to who is eligible and more information can be found at the government’s official website http://www.federalhousingtaxcredit.com/index.html or by consulting with your accountant.

2) Transfer Tax Exemption

In case you are unaware, when you sell a home in Michigan you must pay a transfer tax (a name for real estate sales tax) generally in the amount of $8.60 per $1,000.00 of the sales price. There was an important opinion by Michigan Attorney General Mike Cox in 2008 clarifying the proper application of this obscure exemption of the Michigan Transfer Tax Act. A seller may seek an exemption from paying the state transfer tax if the following criteria are met:

  • The property must have been occupied as a principle residence, classified as homestead property;
  • The property’s State Equalized Value (“SEV”) for the calendar year in which the transfer is made must be less than or equal to the property’s SEV for the calendar year in which the transferor acquired the property; and
  • The property cannot be transferred for consideration exceeding its true cash value (twice the SEV) for the year of the transfer.

Evidently this exemption will only apply to a select few sellers (of the 50 transaction sides that Oltersdorf Realty closed in 2008 none met the criteria) but this number could increase in 2009. This is one of the many reasons it is very important to be informed about your properties taxable and SEV assessments. For example a sale price of $500,000 would save the seller $4,300 if they meet all 3 of the criteria. Please consult your accountant regarding the specifics of this exemption.

3) Receive Principal Residence Tax Exemption on 2 Homes!

In 2008 Governor Granholm signed House Bill 4215, enacting Public Act 96 of 2008, which amended Section 211.7cc of the General Property Tax Act of 1893. The amendment enables a person who has established a NEW principal residence IN MICHIGAN to retain a Principal Residence Exemption (PRE) on property previously exempt as the owner's principal residence. All of the following must be met:

  • Must have previously been the owner's principal residence
  • The home is currently for sale
  • It is not occupied
  • It is not leased
  • It is not used for any business or commercial purposes

    You must apply for this principal residence exemption by May 1, for the 2009 tax year. This is simply another benefit for home owners who have moved to another home within Michigan and are yet to find a buyer for their previous primary home. Please visit the official Michigan.Gov website for more information by clicking HERE.

    This was a lengthy blog entry and if you would like more information on any of these topics, please contact Jonathan or Vicky Oltersdorf at 231-271-7777 or through email at RealEstate@Oltersdorf.com.

    Entry Written By Jonathan Oltersdorf