On March 15, 1994, Michigan voters approved the constitutional amendments known as Proposal “A”.
Prior to Proposal “A” property tax calculations were based on State Equalized Value (SEV). Proposal “A” established “Taxable Value” as the basis for the calculation of property taxes. Increases in Taxable Value (TV) are limited to the percent of change in the rate of inflation or 5%, whichever is less, as long as there were no losses or additions to the property. The limit on TV does not apply to a property in the year following a transfer of ownership (sale).
Suppose your neighbor purchased their home March 20, 2016 and their 2016 State Equalized Value (SEV) was 75,000 and his Taxable Value was 55,000. Their July 2016 tax bill will be calculated based on the prior owners taxable value of 55,000 for 2016 only. The year following the transfer, the TV becomes uncapped. Based on sales of homes in your neighborhood, your neighbor’s new SEV for 2017 is 80,000. Because of Proposal “A” your neighbor’s home became uncapped for tax year 2017, which means their TV will be the same as their SEV for 2017. Their July 2017 tax bill will be calculated using 80,000 TV instead of the prior year’s 55,000.
In other words since Proposal “A” passed, you can no longer compare property taxes with your neighbors. You can compare SEV, but remember to compare apples to apples. Items to compare would be square footage of the home, style, how many baths, is their basement finished, fireplace, garage, decks etc.