New, Loss, Adjustment,
Losses, and
Additions
COMPARING EQUALIZATION, CAPPED VALUE AND
HEADLEE CONCEPTS IN THE RECOGNITION OF
CHANGES IN TRUE CASH VALUE
EQUALIZATION
MANDATE
Article IX, Section 3 of the 1963 Constitution of the State of Michigan provides
for the “uniform general ad valorem taxation of real and tangible personal
property not exempt by law …”
MCL 211.10 provides that “(a) n assessment of all the property …shall be made
annually in all townships, villages and cities by the applicable assessing officer
as provided in section 3, article IX of the state constitution of 1963…”
MCL 211.34(2) provides that “(t)he county board of commissioners shall
examine the assessment rolls of the townships or cities and ascertain whether
the real and personal property in the respective townships or cities has been
equally and uniformly assessed at true cash value.”
MCL 209.4 provides that the State Tax Commission (acting as successor to the
State Board of Equalization, pursuant to MCL 16.186) “shall determine whether
the state equalized valuation of … property in the county was set at the level
prescribed by law or should be revised to provide uniformity among the counties
…”
EQUALIZATION
PURPOSE
Quality local assessing practices can assure uniformity among parcels within a
classification and within a local assessing jurisdiction.
Equalization is to assure uniformity in the level of assessment from one property to
another, among the classifications within each assessment jurisdiction, among the
cities and townships in each county, and among all of the counties within the State
of Michigan.
Lack of uniformity results in a non-uniform distribution of the tax burden.
Lack of uniformity can exist between assessing units due to the failure to value
property at 50% of true cash value, even if the assessments within the unit are
uniform.
This lack of uniformity is corrected by means of a County Equalization Factor. The
goal of the equalization process is to assure that the level of the assessment that
results from the assessment process is uniform for all properties in the State.
EQUALIZATION
PROCEDURE
ADJUSTMENT: Assessment changes that are implemented to recognize
the results of the equalization study, and which were accounted for in
setting the equalization starting base for the year in question.
Adjustments are also sometimes described as changes in assessment to
establish uniformity and meet the 50 percent requirement.
Assessment changes due to a change in the market value of property
improvements, components or structures valued in the preceding year’s
assessment roll.
Market value changes are Adjustments if they were reflected in the
equalization study to set the starting base for the current year.
EQUALIZATION
PROCEDURE
Assessment changes for reasons other than the recognition of the results
of the current equalization study are treated as “New” or “Loss”.
“New” or “Loss” are:
Physical changes in the property
Changes in the taxable status of the property
Certain occurrences that directly or indirectly result in the recognition
of an increase or reduction in market value (such as some
improvements to public services, certain actions by the STC or MTT, and
land division or assemblage activities).
Examples of Equalization Plus Adjustments
• Increases in value due to general price increases in the area.
• Increase in value due to increased demand arising from the
building of a new industrial plant.
• Increase in value due to a new freeway that generally improves
access from the city.
• Increase in value due to improvement in the school system.
• Increase in value due to a reduction in property taxes.
• Increase in value due to zoning changes.
• Increase in the value of an individual assessment solely to
establish uniformity, where no physical change in the property
has occurred.
Examples of Equalization Minus Adjustments
• Decrease in value due to general price decrease in the
local market.
• Decrease in value due to an industrial plant closing.
• Decrease in value due to zoning changes.
• Decrease in value due to financial difficulties in the
school system.
• Decrease in value due to an increase in property taxes.
• Decrease in value of an individual assessment to
establish uniformity.
Examples of Equalization New
• Placement of a legal description on the roll for the first time after
splitting a larger parcel or assembling smaller parcels.
• A classification change which results in the inclusion of a parcel
in a class for the first time.
• The return of a parcel from an exempt status.
• The valuation of a new building or other new property
improvement on the roll for the first time.
• Property that was previously omitted from the roll.
• Value added to reflect additions or improvements to existing
structures or other property improvements.
• Further completion of new construction that was partially
complete on the previous tax day
Examples of Equalization New
• The value increase occasioned by the platting of a parcel.
• Value changes resulting from a State Tax Commission or March
Board of Review determination that omitted property should be
added to the assessment roll.
• In the ABSENCE of an equalization study, increases in value of a
personal property parcel when compared to the previous year,
except for the values of items or components which are statutorily
assessed as personal property but are real property in nature.
• Increased land values or value increases caused by improved
economic conditions which were not reflected in the equalization
study. This sometimes happens when a starting ratio is not based
on a reliable and accurate study but rather is merely an estimate.
Generally, the equalization study, if properly conducted, will
reflect increases in value such as those described in #11
above. Sometimes if the study does not include samples
which are representative of the property in question, such
circumstances may justify New (or Loss) treatment when
the property in question is of a large enough value and has
a significantly different level of assessment than that
indicated by the equalization study, so that the tentative
equalization factor would change.
A representative sample need not include parcels
representing each and every subdivision or plat (or
each subgroup) in the unit’s classification. However, a
sample should contain parcels with study ratios that, in
their aggregate, indicate the average ratio for that unit’s
classification.
Consider the following example:
Z Township has 11 industrial parcels; 10 relatively small
satellite machine shops and 1 relatively large
manufacturing plant.
The county equalization
department (CED) performed no 2002 study to set the
2003 starting base ratio and true cash value for the
industrial real classification. The CED posted the values
from line 308 of the 2002 Form L-4023 (with a 48% ratio)
to line 301 of the 2003 Form L-4023. Therefore, the
2003 starting ratio is 48.00%.
To set the 2003 assessment, Z Township contracted
for an appraisal of the large manufacturing plant. The
appraisal (net of current loss, adjustment, and new)
indicates a 42.00% starting ratio for 2003 for the plant.
The assessor has increased the assessment to 50% of
the appraised value. Even though the increase is not
the result of value that is new to the roll in the usual
sense (such as new construction, exempt and
returning to the roll, or split new); the surplus amount
of assessment increase must be taken as equalization
new for Forms L-4021, L-4022 and L-4023, assuming
that the Equalization Director agrees that the
appraisal is a valid indicator of true cash value.
The remaining amount of assessment increase that is
taken as Equalization New is the amount of the increase
taken to raise the ratio from 42.00% to 48.00% (the
starting ratio shown on line 301 of the L-4023).
The amount of assessment increase that is taken to raise
the ratio from 48.00% to 50.00% is taken as plus
adjustment.
If the entire assessed value increase was taken as plus
adjustment, an unjustified factor of less than 1.00000
could result.
!!! IMPORTANT !!!
The value taken as Equalization New is not
recognized either as capped value additions, or as
additions for Headlee rollback purposes.
For example, suppose that the manufacturing plant has a 200,000,000 TCV for 2003.
2002 AV = 200,000,000 x 42.00% ratio = 84,000,000
2003 AV = 200,000,000 x 50.00% ratio = 100,000,000
2003 NEW = (200,000,000 x 48.00% ratio) – 84,000,000 = 12,000,000
or
=200,000,000 x (48.00% - 42.00%) = 12,000,000
2003 Plus Adjustment = 200,000,000 x (50.00% - 48.00%) = 4,000,000
2002
2003
AV
84,000,000
100,000,000
CV
NA
NA
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment
0
4,000,000
0
0
0
NA
New/Additions
12,000,000
0
If the CED had made a reliable and accurate study for
the Z Township industrial real property classification
for the 2002 assessment year, the entire increase in
value would typically be recognized as plus
adjustment.
(Note: the CED may make the case for stratifying the
plant’s values for equalization purposes on Form L4018.)
Examples of Equalization Loss
• Retirement of a parcel (legal description) after a split, an
assemblage, or a platting.
• Removal of a parcel from the classification when a parcel is
changed from one classification to another (Agricultural to
Residential).
• Removal of a parcel to a tax exempt status.
• The physical destruction or removal of a property component or
improvement.
• Value reductions resulting from a State Tax Commission MCL
211.154 order or from a March Board of Review determination
that improvements improperly assessed to the wrong parcel.
Examples of Equalization Loss
• In the absence of an equalization study showing a starting ratio
greater than 50%, reductions in value in a personal property
parcel when compared to the previous year, except to the extent
that the parcel includes items or components which are
statutorily assesses as personal property but are real property in
nature.
• Decreased land value or the value decreases occasioned by
deteriorated economic conditions that were not reflected in the
equalization study. This sometimes happens when a starting
ratio is not based on a reliable and accurate study but rather is
merely an estimate.
CAPPED VALUE
Mandate
Article IX, Section 3 of 1963 Constitution of the State of Michigan - “…
taxable Value … adjusted for additions and losses, shall not increase
each year by more than the increase in the immediately preceding year in
the general price level … or 5 per cent, which ever is less, until the
ownership of the parcel of property is transferred.”
MCL 211.27a implements the section of the Constitution and provided a
detailed definition of “transfer of ownership”.
MCL 122.34d provides detailed definitions of “Additions” and “Losses”
and provides the formula for calculating Taxable Value.
CAPPED VALUE
PURPOSE
• Fulfill the constitutional and statutory requirements described in the
Mandate.
• Limit the amount by which the value used to compute taxes can increase
in any one year.
• Unless a “Transfer of Ownership” has occurred in the preceding year,
each year’s Taxable Value (TV) must be limited to the lessor of the State
Equalized Value and a the Capped Value (CV).
• CV increases from previous year’s TV by the lesser of the rate of inflation
or 5%.
• CV = [(Previous Year’s TV - Losses) X Inflation Rate Multiplier1] +
Additions
•
1The
lesser of the Consumer Price Level or 1.05
Examples of Capped Value Additions
• Increase in value from inclusion of an omitted building (limited to the
taxable value it would have if it had recognized when built, at the
inception of Proposal A, or the last Transfer of Ownership plus the
permitted taxable value increases.
• Increase in value arising from the inclusion of personal property that
was not reported on a personal property statement.
• New construction on the property
• Value arising from property returning from exempt status2.
• Value arising from replacement of a structure destroyed by act of God
or accident (subject to limitations).
• Increase in value arising from an environmental cleanup (subject to
question because of WPW Acquisition court decision).
• Increase in value arising from introduction of public services
2cases involving industrial exemption certificate or poverty
exemption limit the amount of the Additions to the amount the
property would have had if it had never been exempt.
Examples of Capped Value Loss
• Demolition of an existing building
• Destruction of a building by a flood.
• The exemption of property acquired by a school district (or other
exempt entity) in the preceding year.
• Decrease in value due to impaired occupancy (subject to
question because of WPW Acquisition court decision).
• Decrease in value caused by the recognition of environmental
contamination (subject to question because of WPW Acquisition
court decision).
HEADLEE
MANDATE
Article IX, Sections 25 through 31 of the 1963 Constitution
of the State of Michigan provides for a procedure that
reduces local and county millage rates.
MCL 211.34d implementing statutes
Separate revenue reduction procedure limits the ability of
the State of Michigan to increase revenue by more than
the rat of inflation
HEADLEE
PURPOSE
Operating tax revenue (not including bonded indebtedness) for the
current year cannot exceed tax revenue for the previous year,
increased by the increase in the inflation rate after being adjusted for
taxable value Additions and Losses.
Additions may increase revenue.
Losses may reduce revenue.
Millage Reduction Fractions (MRF) prescribed by MCL 21.34d
PERMANENTLY REDUCE the maximum authorized millage rate that
may be applied to a property’s taxable value.
Headlee overrides are no longer acceptable - Voter authorized
additional millages is the only method available to increase millage
rates.
HEADLEE
PROCEDURE
Generally ADDITIONS are any property new to the
assessment roll.
Generally LOSSES are any property that was formerly a
part of the assessment roll but which is gone from the
current assessment year.
A MILLAGE REDUCTION FRACTION (MRF) is applied to
the maximum authorized millage rate.
MRF = (Prior Year’s Taxable Value - Losses) X inflation Rate Multiplier
Current Year’s Taxable Value - Additions
The purpose of the calculation is assure that revenue is
not collected in excess of that allowed under the Michigan
Constitution.
EXAMPLES OF HEADLEE ADDITIONS
• New construction and other physical improvements to
property.
• Personal property listed as New Acquisitions that have
been property reported on the newest acquisition year of
the Personal Property form and which do not represent a
“rebooked” cost.
• Personal property that is physically moved in from
another assessment or tax levying jurisdiction and which
has either been properly reported as a “Move-In” or has
been verified by audit.
EXAMPLES OF HEADLEE ADDITIONS
• Property that was physically located in the jurisdiction
but was omitted from the assessment in the previous
year.
• The increase in value arising from the removal of
property from exempt status. (IFT and Poverty
exemptions are limited to the amount necessary to
return current taxable value to the amount it would have
been, had the property not received the exemption).
• The increase in value made arising from the
replacement of a structure destroyed by an act of God or
accident - subject to limitations.
EXAMPLES OF HEADLEE ADDITIONS
• The increase in value made arising from an
environmental cleanup (given WPW Acquisition, the
appropriateness of these Additions may now be subject
to question).
• Increase in value arising from the introduction of public
services such as roads, sewers, and other utilities.
EXAMPLES OF ITEMS THAT ARE NOT
HEADLEE ADDITIONS
• Platting, splitting, or combinations of property.
• Change of zoning of a property.
• Increases in Taxable Value attributable to uncapping in
the year following transfers of ownership.
• Increase in reported costs of personal property on an
acquisition year (other than the most recent acquisition
year), unless properly reported as a “Move-In” or the
assessor has audited to verify that the property is new to
the applicable levy jurisdictions.
EXAMPLES OF HEADLEE LOSSES
• Demolition of an existing building
• Destruction of a building by a flood, storm, or fire
• Exemption of property acquired by a school district or
other qualifying entity in the preceding year.
• A decrease in value due to impaired occupancy (Given
WPW Acquisition, the appropriateness of these Losses
may now be subject to question).
• A decrease in value caused by the recognition of
environmental contamination (Given WPW Acquisition,
the appropriateness of these Losses may now be
subject to question).
EXAMPLES OF ITEMS THAT ARE
NOT HEADLEE LOSSES
• The platting, splitting or combination of a parcel of land.
• A change in zoning.
It is not necessarily the case
that value changes that are
identified to be Equalization New,
or Capped Value Additions, or
Headlee Additions must be all
three, or even two of the three.
7 Examples Follow:
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
1. If the classification of the property is changed from
Agricultural to Residential, the value removed from the
Agricultural Class is Equalization Loss to that Class and
Equalization New to the Residential Class, but no
Capped Value Additions or Losses and no Headlee
Additions or Losses are recognized.
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
2. If personal property is moved from one location in an
assessment jurisdiction to another location in the same
jurisdiction which is in a different school district, the value
added to the new school district is not Equalization New
and the value removed from the old school district is not
Equalization Loss. However, although the movement does
not result in Capped Value Additions or Losses if reported
under the same parcel account, it is Capped Value
Additions and Losses if afterward reported under a
different parcel account.
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
2. Continued:
Further, for the assessing unit’s millage rollback calculations, absent an
assessor audit, even if reported under a different parcel account, the
movement will not be reported as a “Move-In” using Form 3966 and it
will, therefore, not be treated as Headlee Additions for the new
account. However, absent audit, it will be treated as Headlee Losses
for the previous account.
For the ‘change in school district’ rollback calculations, the entire prior
year’s taxable value is Losses to the school district that the personal
property left. The entire current year’s taxable value is rollback
Additions to school district the property entered.
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
3. Previously exempt personal property will be treated as
Equalization New, but only to the extent that it results in
an increase from the previous year’s assessment. The
previously exempt personal property may be treated as
Headlee Additions, but only if it is reported as a “MoveIn” on Form 3966, or verified through an assessor’s audit.
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
4. The exemption of personal property may be treated as
Equalization Loss, but only to the extent that it results in a
decreased value for the parcel from the previous year’s
assessment. The newly exempt personal property will be
treated as Headlee Losses.
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
5. Leased equipment previously reported by the lessor and
acquired by the lessee will be Equalization New to the
lessee and Equalization Loss to the lessor. The previously
reported leased equipment will be Headlee Losses for the
lessor’s parcel, unless verified by an assessor’s audit. It
will not be Headlee Additions for the lessee’s parcel,
since it is not a “Move-In.”
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
6. Equipment reported by a previous owner and acquired
by a new owner who keeps it located in the same
assessment jurisdiction (change in accounts, but no
change in jurisdictions) will be Equalization New to the
new owner and Equalization Loss to the prior owner.
The equipment will be Headlee Losses to the prior owner,
unless otherwise verified by an assessor’s audit, it will not
be Headlee Additions to the new owner, since it is not a
“Move-In.”
Combinations of Equalization NEW, Capped Value
ADDITIONS, and Headlee ADDITIONS
7. If a parcel has been split, combined or platted, the new
parcel created will be deemed to be Equalization New and
the retired parcel(s) will be deemed to be Equalization Loss.
However, there are no Capped Value Additions or Losses
and there are no Headlee Additions or Losses.
The same general principles that are applied
above to the comparison of Equalization New,
Capped Value Additions and Headlee
Additions, also apply to Equalization Loss,
Capped Value Losses and Headlee Losses.
ERRONEOUS ACTIONS BY
ASSESSORS - PERSONAL PROPERTY
Many assessors mistakenly assumed that if a value
reduction was Headlee Losses, it must also be a
Capped Value Losses.
THIS ASSUMPTION IS INCORRECT
The method established to calculate Headlee Losses
and Additions for personal property was knowingly and
intentionally designed so that, in the absence of
verification through an assessor’s audit, it would not
understate Headlee Losses and would not overstate
Headlee Additions. This was done so that the Headlee
Millage Reduction Fraction would not be understated.
The State Tax Commission does not expect there to be
more than a handful of instances, even in the largest of
jurisdictions, where the Personal Property Capped Value
is properly set in an amount less than the State
Equalized Value.
Most personal property declines in value from one year
to the next. In most instances where the Capped Value
appears to be less than the State Equalized Value, there
is likely to be a mistake, and an analysis must be made
to determine whether the value is actually capped.
In particular, the assessor must be prepared to recognize
four situations:
1. Instances where the taxpayer changes the Section in
which it reports its property. For instance, if all of the
property is reported in Section B one year and reported in
Section F the next, there is probably an incorrect report in
one of the years, that may result in omitted or improperly
reported property.
2. Instances where the taxpayer has “rebooked” its costs
and has reported on the most recent acquisition year,
while omitting all previous acquisition years.
3. Instances where the value may be properly capped, arising
from the fact that assets have increased in value, rather than
declined in value. Examples are cases where the assessment
is composed primarily of fluid pipeline property, fine art, other
Section G reported assets that present unusual valuation
problems and assets that have, in the past been undervalued,
resulting in a capped under-assessment.
Even in these cases, Bulletin 1 of 2000 provides that the value
is capped, only if the effect on the entire assessment is such
that the assessment, after adjusting for Additions and Losses
exceeds the lesser of the rate of inflation or 5%.
Bulletin 1 of 2000 also indicates that an asset-by-asset review
is necessary before concluding that the value is capped.
4. In instances where the assessment was estimated in
the preceding year, in the current year, or in both years, all
net changes are deemed to be either Headlee Additions
or Headlee Losses.
Such changes will also be deemed to be Equalization
New or Loss.
DETERMINING ADDITIONS AND
LOSSES USED IN THE
CALCULATION OF THE
“HEADLEE” MILLAGE
ROLLBACK AND THE “TRUTH IN
TAXATION” ROLLBACK FOR
PERSONAL PROPERTY
1.
The State Tax Commission has directed that a
new system for determining ADDITIONS and LOSSES
shall be used in the calculation of the “Headlee” Millage
Rollback and the Truth in Taxation Rollback for personal
property, starting in assessment year 2004. This new
system is set forth in State Tax Commission Bulletin
19 of 2002.
2.
The directives in Bulletin 19 of 2002 apply only to
the calculation of the “Headlee” rollback (MCL 211.34d)
and the Truth in Taxation rollback (MCL 211.24e). They
DO NOT apply to the calculation of capped value or to
the equalization process.
In the past, the procedure for determining
ADDITIONS and LOSSES used in the calculation of the
“Headlee” Millage Rollback and the “Truth in Taxation”
Rollback FOR PERSONAL PROPERTY stated that all
changes in taxable value were either ADDITIONS or
LOSSES.
3.
Starting in assessment year 2004, this procedure
shall no longer be used. The State Tax Commission
recognizes that any practice that would understate the
amount of the constitutionally mandated “Headlee”
rollback of taxes is impermissible.
Calculating a MRF that is too high is not permitted,
and would likely be found to be unconstitutional.
The following practices must be avoided because they
would understate the amount of the “Headlee” rollback of
taxes and produce a MRF that is too high:
Avoid Understating LOSSES - Understating
LOSSES results in an understatement of the amount of
the “Headlee” rollback of taxes.
a.
In order to avoid understating LOSSES, it is necessary to
determine the amount of “move-ins” of used equipment.
(“Move-ins” of used equipment will be defined later in this
outline.)
Avoid Overstating ADDITIONS - Overstating
ADDITIONS results in an understatement of the amount of
the “Headlee” rollback of taxes.
b.
In order to avoid overstating ADDITIONS, it is necessary
to determine the amount of “move-ins” of used equipment.
Avoid Netting of ADDITIONS and LOSSES - Netting
of ADDITIONS and LOSSES (versus separate treatment of
ADDITIONS and LOSSES) must be avoided because it
understates the amount of the “Headlee” rollback of taxes.
c.
The formula for calculating the “Headlee” Millage
Reduction Fraction rollback has not changed for several
years. The formula is as follows:
4.
(Prior Year’s Taxable Value – LOSSES) X Inflation Rate Multiplier
Current Year’s Taxable Value – ADDITIONS
The formula for calculating the “Truth in Taxation” Rollback
has not changed for several years. The formula is as
follows:
Prior Year’s Taxable Value – LOSSES
Current Year’s Taxable Value - ADDITIONS
What has Changed?
The method of identifying LOSSES and ADDITIONS used in the
Millage Rollback and Truth in Taxation Rollback calculations.
Starting in 2004, the instructions for determining ADDITIONS and
LOSSES for Forms L-4025 and L-4028 will also apply to personal
property, where appropriate.
The following are some specific guidelines of particular interest for
determining ADDITIONS and LOSSES used in the calculation of the
“Headlee” and “Truth in Taxation” rollbacks for personal property.
The following increases in Taxable Value ARE ADDITIONS
and are referred to as “move-ins”.
There are two types of “move-ins” - “move-ins” of NEW
equipment and “move-ins” of USED equipment.
(It is important to note that only “move-ins” of USED
equipment are reported on STC Form 3966 which is filed by
the taxpayer along with the personal property statement.)
i
Acquisitions of new personal property made during
the year preceding the current tax year are “moveins” of new equipment.
Example: for the 2004 tax year, acquisitions of new
personal property made during 2003 are “move-ins”
of new equipment and are ADDITIONS.
ii Acquisitions of used personal property are “move-ins” of
used equipment provided that ALL of the following apply:
1) The personal property was NOT formerly used by the
purchaser as leased equipment within this same
governmental unit in the immediately preceding year.
2) The personal property was NOT formerly used by the
purchaser at another location within this same
governmental unit in the immediately preceding year (i.e.
moved to a new location within the taxing jurisdiction).
3) The personal property was NOT formerly assessed to
a different owner in the same jurisdiction in the
immediately preceding year.
iii
Personal property that was exempt in the prior year
is “move-ins” (for example, personal property that was
exempt on the IFT roll in the prior year).
iv
Personal property omitted from the roll in the
immediately preceding year is “move-ins”.
The following increases in Taxable Value ARE NOT
“Headlee” or “Truth in Taxation” ADDITIONS and are NOT
“move-ins”.
They are referred to as Non-Headlee
Increases.
i
Acquisitions of used personal property purchased
from a leasing company AND reported in the prior year by
the leasing company in this same governmental unit.
ii
Used personal property reported last year at a
different location and/or by a different taxpayer in the
same governmental jurisdiction. For example, used
equipment moved from one location to another location in
the same city, or property purchased as part of a going
concern from a previous owner is not “move-ins.”
iii
Increases in taxable value due to an increase in the
multiplier tables from one year to the next, for example, the
increase from one year to the next found in Table K (Crude
Oil and Fluid Pipelines).
The following reductions in taxable value are LOSSES
i
Property assessed in a prior year and physically
removed from the governmental unit in the following year.
ii
When a leasing company sells used equipment to
the same company which has been leasing the
equipment, this reduction shall be treated as LOSSES on
the leasing company’s statement, even though the
equipment stays in the same unit of government. This is
necessary because the mechanics of the system of
estimating LOSSES for the lessee/user could otherwise
understate LOSSES, IN THIS ONE SITUATION.
ii – 1 If an audit of the purchaser’s personal property
statement is performed, which identifies formerly leased
equipment and which reveals that the purchase does NOT
offset LOSSES on the purchaser’s statement, then it is not
necessary to treat the sale (to the user) of formerly-leased
equipment as LOSSES on the leasing company’s
statement.
ii – 2 Unless an audit is conducted, all reductions in
reported costs on a leasing company’s personal property
statement must be treated as LOSSES.
ii – 3 Note that the purchaser must report the same cost
and acquisition year for the property that was reported by
the leasing company.
iii
The bulk transfer of the assets of an ongoing
business, where the purchaser continues to operate
the business in the same location must be treated as
LOSSES, if there is not continuity of reporting (i.e.
reporting by the new owner using the same parcel
code). It is necessary to treat this type of sale of
assets as LOSSES for the reason that the purchaser
who is continuing the business frequently does not
acquire all of the seller’s assets or disposes of some
of the assets purchased prior to tax day and the
present system would not otherwise recognize these
as LOSSES.
iii – 1 If the assessor performs an audit and determines the
amount of assets which were not purchased by the person
who is continuing the business and/or the amount of
disposals by the purchaser prior to tax day AND treats these
as LOSSES, then it is not required to treat the rest of the
assets involved in the bulk sale as LOSSES.
iii – 2 Note that the purchaser must report the same cost
and acquisition year for the property that was reported by
the seller.
iii – 3 This procedure (of treating bulk transfers as
LOSSES) would not typically be necessary in cases where
the same parcel code, formerly assigned to the seller, is
also assigned to the buyer.
The following reductions in taxable value ARE NOT
“Headlee” or “Truth in Taxation” LOSSES and are referred
to as Non-Headlee Reductions.
i
Reductions caused by a reduction in the personal
property multipliers from one year to the next.
ii
Reductions caused by applying the Idle and
Obsolete or Surplus equipment multiplier of .40. (Please
see pages 5 and 6 of STC Bulletin 12 of 1999 regarding
the Idle and Obsolete or Surplus Equipment multiplier.)
iii
Used personal property moved to another location
in the same township or city may be treated as a NonHeadlee Reduction, but only if fully supported by audit.
6.
ADDITIONS and LOSSES are calculated separately
for each section of the personal property statement AND for
each acquisition year within each section.
7.
Assets Reported on Section G of the Personal
Property Statement (STC Form 632, formerly L-4175) must
be separately analyzed to determine whether changes in
taxable value from one year to the next are ADDITIONS
and/or LOSSES.
8.
Section H is a separate section for the reporting of
assessable tooling. The costs reported on the top line of
Section H are ADDITIONS. All cost reductions on the rest
of the table are LOSSES. All increases on the rest of the
table are Non-Headlee Increases (NOT ADDITIONS).
Any departure from this guideline must be supported by
an audit.
9.
Assets reported on Section I of the Personal
Property Statement must be individually analyzed to
determine whether changes in taxable value from one year
to the next are ADDITIONS and/or LOSSES.
10.
The STC procedures for reporting Construction in
Progress (CIP), as outlined on the 2003 Personal Property
Statement, state that property that was reported as
Construction in Progress last year and was placed in
service on or before December 31, 2002, should be entirely
reported on the 2002 acquisition line. That being the case,
it is necessary to reduce the ADDITIONS on the 2002
acquisition line of the 2003 personal property statement by
the amount of CIP reported on the prior year’s statement.
(This assumes that CIP does not extend over more than
one year.) This procedure is necessary because the CIP is
contained as ADDITIONS in the prior year’s taxable value,
and it is also fully reported as ADDITIONS on the 2002
acquisition line of the 2003 statement.
Unless the
adjustment is made, the result would be an overstatement
of ADDITIONS.
11.
MCL 211.22 authorizes an assessor to estimate an
assessment under certain circumstances. This is frequently
the case when a property owner fails to file a personal
property statement as required by law.
An estimated
assessment is based on the amount that the assessor
considers reasonable and just.
If an assessor has estimated a taxpayer’s assessment for
personal property in the current year, or has estimated a
taxpayer’s assessment in the year immediately preceding
the current year, or has estimated a taxpayer’s assessment
in both the current year and in the year immediately
preceding the current year, the following procedures shall
apply:
a.
If the assessor’s current year assessment
incorporates an increase for additional personal property
reasonably estimated to have been placed at that property
location, an increase in Taxable Value attributable to the
additional personal property is ADDITIONS in the calculation
of millage rollbacks.
If, after the close of the March Board of Review, a legal
determination by the Michigan Tax Tribunal, or by another
legally sufficient source, indicates that the estimate made by
the assessor resulted in ADDITIONS that were greater than
should have been applied, the reduction entered for Headlee
and Truth in Taxation millage rollbacks is considered to be
LOSSES for the following year’s rollback calculations.
b.
If the assessor’s current year assessment incorporates
a decrease for personal property that was reasonably
estimated to have been removed from that property location,
the decrease in Taxable Value attributable to the removed
personal property is LOSSES for the calculation of millage
rollbacks.
If, after the close of the March Board of Review, a legal
determination is received from the Michigan Tax Tribunal, or
from another legally sufficient source, which indicates that the
estimate made by the assessor resulted in LOSSES that
were greater than should have been applied, the increase
entered for Headlee and Truth in Taxation millage rollbacks is
considered to be ADDITIONS for the following year’s rollback
calculations.
12.
A reduction in the value of personal property
assessed in the jurisdiction the previous year, due to the
placement of the property on idle and/or obsolete or
surplus property status, as defined in Form 2698, is a nonHeadlee reduction (not LOSSES) for the calculation of
millage rollbacks.
An increase in the value of personal property assessed in
the jurisdiction the previous year, due to the removal of the
property from idle and/or obsolete or surplus property
status, as defined in Form 2698, is a non-Headlee increase
(not ADDITIONS) for the calculation of millage rollbacks.
12. continued:
Idle and obsolete or surplus personal
property may qualify as "move-ins", if it was not assessed
in the jurisdiction the previous assessment year. Due to
the limited number of instances where this situation arises,
the State Tax Commission has not provided for this
possibility on Form 3966 (the “move-in” form). Instead, if a
taxpayer has idle and/or obsolete or surplus property that
also meets the definition of being a "move-in", the taxpayer
should so indicate prominently on the Form 2698 (the idle
and obsolete or surplus property form).
If the taxpayer also has items of "idle and/or obsolete or
surplus property" which are not "move-ins", the taxpayer
should complete two Forms 2698 (one for each
circumstance) and indicate prominently on both that there
are two Forms 2698 attached to the Form 632 (formerly L4175).
13.
The staff of the Property Tax Division will be
developing a spreadsheet program that will be placed on
a future update of the CD produced by the State Tax
Commission and the Treasury Department. Staff will also
be developing a form for use in 2004 for manually
calculating the rollbacks.
This form will be placed on the Treasury Department Web
site accessed at www.michigan.gov/treasury. When
you reach the site, click on Forms.
632
PERSONAL PROPERTY SECTION A
Including Furniture and Fixtures
County:
Unit:
A
B
C
D
E
Acq. Yr.
2003
2004
2004
A-(B-C)
Previous
Report
Report Move-Ins If Greater
Year's
than Zero, Multiplier
otherwise
(2003)
Zero
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
Prior
Subtotals
Check
0.91
0.80
0.69
0.61
0.53
0.47
0.42
0.37
0.33
0.29
0.27
0.24
0.22
0.19
0.12
F
G
H
Headlee Current Headlee
Losses
Year's Additions
(D x E) Multiplier (C X G)
0.91
0.80
0.69
0.61
0.53
0.47
0.42
0.37
0.33
0.29
0.27
0.24
0.22
0.19
0.12
0.12
Parcel ID:
I
A-D
J
Depr.
Mult.
K
NonHeadlee
Reduction
(I X J)
L
2004
TCV
M
2003 TCV
0.11
0.11
0.08
0.08
0.06
0.05
0.05
0.04
0.04
0.02
0.03
0.02
0.03
0.07
0.00
0
N
O
NonNonHeadlee Headlee
Cost
Increases
B-(A+C) (N X G)
If Greater
than Zero
New, Loss, Adjustment,
Losses, and Additions
Scenarios and Problems
with Answers
2004
For the purpose of these examples, unless otherwise
stated, the following data apply
There are no Transfers of Ownership.
IRM = Inflation Rate Multiplier
IRM for 2002 capped value is 1.032.
IRM for 2003 capped value is 1.015.
IRM for 2004 capped value is 1.023.
AV = assessed value (tentative SEV)
SEV = state equalized value
CV = capped value
TV = taxable value
Tentative Equalization Factors for the Agricultural, Commercial, Industrial,
Timber – Cut Over, Developmental, and Personal Property classifications
are1.00000. For Residential the factor is 1.05264 (the assessor makes
appropriate adjustments to achieve a Final Equalization Factor of 1.00000).
Show the 2002 AV, 2002 TV, 2003 AV, 2003 TV, and L-4021 figures for each of
the following examples:
Basic Formulas:
Capped Value = (Previous TV – Losses) X Lesser of IRM or 1.05 + Additions
Taxable Value = Lessor of Capped Value or State Equalized Value
Generally, Capped Value Losses = TCV of Loss for prior year X (Prior TV of Loss
 Prior TCV of Loss)
Plus
Adjustment

Equalization study indicates average residential
classification assessment ratio for unit is 47.50.
Unfortunately, the assessor uniformly increases all
assessments by factoring the assessment roll. The
previous assessment is $45,000; the previous
taxable value is $30,425.
1
2003 AV = 45,000 X 1.05264 = 47,369
2003 Capped Value = 30,425 X 1.015 = 30,881
Equalization Plus Adjustment = 45,000 X 0.05264 = 2,369
2002
2003
AV
45,000
47,369
CV
30,425
30,881
TV
30,425
30,881
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
2,369
0
0
0
0
N/A
N/A
N/A
0
N/A
0
1
Absent a ‘transfer of ownership’, the current taxable value is the lessor of the
current ‘capped value’ and the current ‘state equalized value’. In the year
following a ‘transfer of ownership’, the current taxable value is the same as the
current ‘state equalized value’.
Note that this problem says unfortunately, the assessor uniformly increases
all assessments by factoring the assessment roll. The State Tax Commission
does not recommend the factoring of the assessment roll. This act magnifies any
inequity that exists in the assessment roll and does not take into account the
different market factors that affect properties. Waterfront properties do not
normally change in value at the same rate as non-waterfront properties. Older or
poorly kept properties do not change at the same rate as newer or wellmaintained properties.
Note that the equalization plus adjustment does not equal the capped value
increase. The capped value calculation is strictly a mathematical equation and
the result of the equation is compared to the state equalized value to determine
the taxable value (lower of the CV or the SEV). Also note that at this point in the
process, only the tentative SEV is known. If the County or the State adds or
reduces value during County or State Equalization, the taxable value determined
by the assessor and March Board of Review may need to be changed.
1
A new manufacturing plant is built in the township increasing
the demand for employees by a significant number. The
sales used in the equalization study recognize the upward
pressure for housing as a result of the new plant. No
physical change has been made to the following property.
Previous assessed value is $45,000 and the current
assessed value is $50,000. The previous taxable value is
$31,629.
2
Equalization Plus Adjustment = 50,000 – 45,000 = 5,000
2003 Capped Value = 31,629 X 1.015 = 32,103
2002
2003
AV
45,000
50,000
CV
31,629
32,103
TV
31,629
32,103
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
5,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
2
A new freeway is built near a neighborhood
improving access and increasing the desirability of
the homes in that area. Previous assessed value
is $65,000 and current assessed value is $75,000.
The previous taxable value is $65,000. No other
changes to the property are evident.
3
2003 Equalization Plus Adjustment = 75,000 – 65,000 = 10,000
2003 Capped Value = 65,000 X 1.015 = 65,975
2002
2003
AV
65,000
75,000
CV
65,000
65,975
TV
65,000
65,975
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
10,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
3
The 2002 equalization study indicates an assessment
ratio of 40.00%. What does the assessor need to do in
2003 to assess a property worth $150,000 that was
assessed in 2002 at 40% of TCV? The 2002 taxable
value was $40,000. The assessor brings the
assessment up to 50% for 2003 (assume no increase in
true cash value and no physical changes to this
property).
4
2002 AV (BOR) = 150,000 TCV X 0.40 = 60,000
2003 AV (BOR) = 150,000 TCV X 0.50 = 75,000
2003 Equalization Plus Adjustment = 75,000 – 60,000 = 15,000
2003 Capped Value = 40,000 X 1.015 = 40,600
2002
2003
AV
60,000
75,000
CV
40,000
40,600
TV
40,000
40,600
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
15,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
4
The local school system retired a large bond and
the millage within that district dropped from 45
mills to 38 mills two years ago. The equalization
study indicates properties in this school system
command 10% more than in neighboring school
districts within the same township and recognizes
this increase in value in the starting ratio. The
assessor increased the assessment from $75,000
to $90,000. There were no physical changes to the
property. The previous taxable value is $68,420.
5
2003 Equalization Plus Adjustment = 90,000 – 75,000 = 15,000
2003 Capped Value = 68,420 X 1.015 = 69,446
2002
2003
AV
75,000
90,000
CV
68,420
69,446
TV
68,420
69,446
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
15,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
5
Three sections of land were changed from single
family residential zoning to multi-family zoning. The
equalization department conducted a study and
concluded that the land value increased from
$5,000 per acre to $20,000 per acre. A five-acre
parcel in that area was assessed for $12,500. The
assessor updated the assessment to $50,000. The
previous taxable value is $7,000.
6
2003 Equalization Plus Adjustment = 50,000 – 12,500 = 37,500
2003 Capped Value = 7,000 X 1.015 = 7,105
2002
2003
AV
12,500
50,000
CV
7,000
7,105
TV
7,000
7,105
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
37,500
0
0
0
0
N/A
N/A
N/A
0
N/A
0
6
Five similar properties on Second Avenue are
assessed at $30,000. A sixth property with the same
characteristics was assessed for $25,000. The
assessor increased the assessment of this property
by $5,000 to equal the assessments reported for the
other similar properties. The previous taxable value
is $24,500.
7
2003 Equalization Plus Adjustment = 30,000 – 25,000 = 5,000
2003 Capped Value = 24,500 X 1.015 = 24,867
2002
2003
AV
25,000
30,000
CV
24,500
24,867
TV
24,500
24,867
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
5,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
7
The assessor of a fast growing area has made it a practice since 1995 not to
value decks and walkways in the assessments. The equalization department
has always used a 24-month sales study in this unit. For 2003 the assessor
adds the value of the decks and walkways and indicates them as
Equalization New, Taxable Value Additions, and Headlee Additions on the
Form L-4021.
How does the Equalization Department handle this situation?
8
The Equalization Department will change the Form L-4021 by reporting the value
attributable to the Equalization New of the decks and walkways as Equalization
Plus Adjustment.
Note: The amounts reported as Capped Value Addition and as Headlee
Additions attributable to the decks and walkways by the assessor are correct
because they were never included in the Taxable Value of these properties. This
is done because past equalization studies have already included the value of the
decks and walkways in the beginning 2003 value. The equalization department
will then submit to the State Tax Commission a Form L-4022 with the revisions.
These revisions will form the basis of the Form L-4023. For years following the
year that decks and walkways are first included in the assessment, newly
constructed decks and walkways must be added as Equalization New, as
Capped Value Additions, and as Headlee (rollback) Additions.
Note: It is the position of the State Tax Commission that the equalization
department DOES NOT have the authority to correct a Board of Review’s
determination of capped and taxable value.
8
Minus
Adjustment

The equalization department sales study indicates that
the average assessment level in a class is 55.00%. The
assessor changes the assessment of a parcel from
$65,000 to $58,000 to reflect the results of the study.
The previous taxable value is $60,000.
9
2003 Equalization Minus Adjustment = 58,000 – 65,000 = -7,000
2003 Capped Value = 60,000 X 1.015 = 60,900
Note: the tentative SEV is lower than capped value, therefore SEV
becomes TV
2002
2003
AV
65,000
58,000
CV
60,000
60,900
TV
60,000
58,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-7,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
You will note that there was $7,000 equalization minus adjustment however the
capped value increased $900. Capped value is always determined strictly by a
mathematical formula. The capped value is then compared to the SEV to
determine the taxable value. At this point in the process, only the tentative SEV is
known. If the County or the State adds or deletes value during County or State
Equalization, the taxable value determined by the assessor and March Board of
Review may need to be changed.
9
The major employer, a furniture manufacturer, moves
its operations out of state. The result is a weakening of
the market for residential property that is measured by
the sales used in the equalization study. The assessor
changes the assessment of a home that was
completed five years ago from $75,000 to $60,000. The
previous taxable value is $51,226.
10
2003 Equalization Minus Adjustment = 60,000 – 75,000 = -15,000
2003 Capped Value = 51,226 X 1.015 = 51,994
2002
2003
AV
75,000
60,000
CV
51,226
51,994
TV
51,226
51,994
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-15,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
This is an example demonstrating that because there is equalization minus
adjustment, it does not follow that there must also be capped value losses or a
reduction in the taxable value. The capped value formula is mathematical. The
losses or additions resulting from that calculation are independent of equalization
adjustment. The resulting capped value is compared to the SEV and taxable
value becomes the lessor of the two.
10
The zoning in an area changes from high-density
single family zoning to single family zoning requiring
20-acre minimum building sites. Two parcels of land
in this area sold. Due to the zoning change, the
assessor changes the assessment for a parcel of
vacant land in this area from $30,000 to $20,000.
The previous taxable value is $25,000.
11
2003 Equalization Minus Adjustment = 20,000 – 30,000 = -10,000
2003 Capped Value = 25,000 X 1.015 = 25,375
Note: the tentative SEV is lower than the capped value, therefore the TV is
the tentative SEV.
2002
2003
AV
30,000
20,000
CV
25,000
25,375
TV
25,000
20,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-10,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
11
The local school district funding is decreasing due to falling
enrollment resulting in lower state aide. Class sizes are
increased as teachers are released to reduce cost; sports
and other extra curricular activities are eliminated; and bus
routes are extended. Demand for homes in this school
district decreases as problems continue to build. The
equalization study includes a representative sample of
parcels in this area. The assessor reduces the assessment
of a home $4,500 (no physical change to the property). The
previous assessed value is $50,000 with a previous taxable
value of $40,000.
12
2003 Equalization Minus Adjustment = 45,500 – 50,000 = -4,500
2003 Capped Value = 40,000 X 1.015 = 40,600
2002
2003
AV
50,000
45,500
CV
40,000
40,600
TV
40,000
40,600
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-4,500
0
0
0
0
N/A
N/A
N/A
0
N/A
0
12
The assessor values vacant ten-acre parcels at $20,000
TCV each. During a review of the assessment roll the
assessor discovers a ten-acre parcel valued at $25,000
TCV. After checking for differences, it is determined that this
parcel should also be valued at $20,000 TCV. The
assessment is lowered from $12,500 to $10,000. The
previous taxable value is $11,225.
13
2003 Equalization Minus Adjustment = 10,000 – 12,500 = -2,500
2003 Capped Value = 11,225 X 1.015 = 11,393
Note: the tentative SEV is lower than the capped value, therefore the TV is
the tentative SEV.
2002
2003
AV
12,500
10,000
CV
11,225
11,393
TV
11,225
10,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-2,500
0
0
0
0
N/A
N/A
N/A
0
N/A
0
13
Equalization
New
The owner of a forty-acre parcel requested the
assessor create four equal two-acre parcels and leave
the remaining thirty-two acres in a fifth parcel. The
assessor complies and follows State Tax Commission
instruction by retiring the original parcel number and
creating five new (Child) parcels. There is no transfer
of ownership. The original parcel was assessed in
2002 at $40,000 ($80,000 TCV or $2,000/acre). All of
the land in this parcel was similar in value for 2002
and was valued at $2,000 per acre TCV. The new twoacre parcels are assessed at $10,000 (i.e.
$5,000/acre) each in 2003 and the thirty-two acre
parcel is assessed at $32,000 (i.e. $1,000/acre) in
2003. The previous taxable value is $35,000.
13
2003 Equalization Loss is the entire original parcel
2003 Headlee Losses – None, there was no physical change to the
property.
Parent Parcel
2003
2002
0
40,000
AV
N/A
35,000
CV
0
35,000
TV
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
40,000
0
0
0
N/A
N/A
N/A
0
N/A
0
Note that there are no physical changes to this property. Since the 2003 SEV will
be zero, which causes the 2003 TV to become zero, the 2003 capped value of
$35,525 will be muted.
13
STC bulletin 14 of 1996 on page 3 says “For example
description splits, platting of subdivision, and combination
of descriptions create new parcels which do not have a
taxable value for the prior year. The assessor must
determine the taxable value for the prior year for the
newly created parcels.” This means that for splits, the
assessor must allocate the parent parcel’s taxable value
for the immediately preceding year to each child parcel.
For the 2003 capped value formula, the allocated amount
becomes the child parcel’s 2002 taxable value.
14
Please note that for the 2003 capped value formula, it is
not proper to assign zero to prior year’s taxable value
and call the allocated amount a capped value addition.
This improper practice would often result in the capped
value addition also being treated as additions for
rollback purposes. STC Bulletin 18 of 1995, Heading 5a
states “Platting, splits, combinations, and class changes
are categorized as equalization New and Loss but are
NOT Additions and Losses for Capped Value,
“Headlee”, and Truth in Taxation calculations.”
14
The Child Parcels are:
14a
2003 AV (BOR) = 5,000 X 2 acres = 10,000
2002 TV = 35,000 X (4,000 ÷ 80,000) = 1,750
Note: The allocation of the prior year’s taxable value is based on the ratio of
the prior year’s TCV of the child parcel to the prior year’s TCV of the
entire parent parcel. The 2002 TCV was $2,000/acre or $2,000 X 2 acres
= $4,000 allocated TCV. $2,000 X 40 = $80,000 total TCV
2003 Capped Value = (1,750 – 0) X 1.015 + 0 = 1,776
AV
2002
0
2003
10,000
CV
0
1,776
TV
0
1,776
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
10,000
0
N/A
0
0
N/A
N/A
0
N/A
0
Child Parcels 14b through 14d are the same as 14a above
14
14e
2003 AV (BOR) = 1,000 X 32 acres = 32,000
2002 TV = 35,000 X (64,000  80,000) = 28,000
2003 CV = (28,000 – 0) X 1.015 + 0 = 28,420
2002
2003
AV
0
32,000
CV
0
28,420
TV
0
28,420
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
32.000
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: Since there was no transfer of ownership involved, the total taxable value
of the child parcels must equal the parent parcel taxable value, adjusted by the
IRM. (Assuming no changes or additions)
Proof: Previous TV X IRM = 35,000 X 1.015 = 35,525
Current TV = (1,776 X 4) + 28,420 = 35,524 (difference due to rounding, taxable
values must be rounded down)
14
The assessor made a complete review of the
agricultural classification. During the review process
the assessor determines that the highest and best use
for a parcel of land is for recreational use. The
assessor changes the classification from Agricultural to
Residential. The previous assessment was $25,000
and the new assessment is $30,000. The previous
taxable value is $20,000.
15
2003 Equalization Loss = 25,000 (the 2002 AV (BOR) value of the
Agricultural Class)
2003 Capped Value = 20,000 X 1.015 = 20,300
2003 Equalization New = 30,000 (50% of the true cash value as a
Residential use property.
2002
2003
AV
25,000
30,000
CV
20,000
20,300
TV
20,000
20,300
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
25,000 (ag)
0
30,000 (res)
0
0
0
N/A
N/A
N/A
0
N/A
0
15
There are no Headlee Losses or Additions because
there was no physical change in the property. There are
no Capped Value Losses. Recall that a ‘transfer of
ownership’ does not, itself, result in capped value
additions or Headlee additions. However, it must result in
an uncapping of the following year’s taxable value.
The Equalization Loss occurs in the Agricultural
Classification, appears on Form L-4021 (606), and is
carried through to Forms L-4022 (607) and L-4023
(2164). The Equalization New applies to the Residential
Classification, appears on Form L-4021, and is carried
through to Forms L-4022 and L-4023.
15
Last year’s (2002) March Board of Review granted a 40%
partial poverty exemption. The 2002 assessed value was
reduced from $50,000 to $30,000 and the taxable value was
reduced from $40,000 to $24,000. Assume the assessed
value is the same as the SEV in 2002 and 2003.
16
2002 AV = 30,000
2002 TV = 24,000
2002 Equalization Loss = 20,000 (due to exemption)
2002 Headlee Losses = 16,000 (due to exemption)
Assume the assessments increased by 6% in 2003 due
to market value increases. Calculate the assessed
value, capped value, and tentative taxable value for
2003.
16
2003 AV and SEV =
2003 CV Additions =
50,000 X 1.06 = 53,000
(40,000 X 1.015) – (24,000 X 1.015) =
40,600 – 24,360 = 16,240
2003 CV = (24,000 – 0) X 1.015 + 16,240 = 40,600
2003 TV = 40,600 (prior to reductions for 2003)
16
16a.
Last year’s (2002) Board of Review granted a 100%
poverty exemption. The 2002 assessed value was
reduced from $50,000 to 0 and the taxable value was
reduced from $40,000 to 0. Assume the assessed value
is the same as the SEV in 2002 and 2003.
16a
2002 AV = 0
2002 TV = 0
2002 Equalization Loss due to exemption is 50,000
2002 Headlee Losses due to exemption is 40,000
Assume assessments increase by 6% in 2003 due to
market value increases. Calculate assessed value,
capped value and tentative taxable value for 2003.
16a
2003 AV (and SEV) = 50,000 X 1.06 = 53,000
2003 CV Addition = (40,000 X 1.015) – (0 X 1.015) =
40,600
2003 CV = (0 – Losses) X 1.015 + 40,600
2003 TV = 40,600
2003 Equalization New = 53,000
If the 2003 Board of Review again grants a 100%
poverty exemption, the 2003 Equalization New = 0 and
the 2003 Headlee Additions and Losses = 0.
16a
The taxable value of property returning to the roll from an
exempt status (in the case of #16 a partial poverty
exemption) often is less than the SEV of added value. The
capped value addition for property returning to the roll from a
poverty exemption is the “taxable value the entire parcel of
property would have had if that property had not been
exempt, minus the product of the entire parcel’s taxable
value in the immediately preceding year and the lessor of
1.05 and the inflation rate.” The assessor is required to
maintain a record of ‘what the TV would have been had no
exemption been granted’ due to poverty exemptions that
may be granted in consecutive years. (See pages 7 and 8 of
STC Bulletin 3 of 1995.)
16a
A new house was built on property whose 2002 assessment,
as vacant land, was $15,000 and a taxable value of $10,000.
The assessor adds $40,000 to the 2003 assessment.
$39,000 of the increase is New Construction, $1,000 of the
increase is Land Value.
17
2003 Equalization Plus Adjustment = 1,000 (land value increase)
2003 Equalization New = 39,000 (new construction)
2003 Capped Value Addition = 39,000 (SEV of Additions)
2003 Capped Value = (10,000 X 1.015) + 39,000 = 49,150
2003 Headlee Additions = 39,000 (new construction)
2002
2003
AV
15,000
55,000
CV
10,000
49,150
TV
10,000
49,150
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
1,000
39,000
0
0
39,000
N/A
N/A
N/A
0
N/A
39,000
17
The assessor discovers that a property built in 2001 was
listed and assessed as having one bathroom while it actually
has two bathrooms. Notations on the record card support the
omission. Because of the discovery, the assessor adds
$1,250 to the 2003 assessment. If the bathroom had been
assessed in 2002, its assessed value would have been
$1,200. The previous assessment (2002) was $35,000 and
its taxable value was $22,500. Assume that market value
has increased 4% for the 2003 assessment.
18
2003 Equalization New = 1,250
2003 Capped Value Addition = 1,200 X 1.015 = 1,218
2003 Capped Value = (22,500 – 0) X 1.015 + 1,218 = 24,055
2003 Assessed Value = 35,000 X 1.04 + 1,250 = 37,650
2002
2003
AV
35,000
37,650
CV
22,500
24,055
TV
22,500
24,055
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
1,400
1,250
0
0
1,218
N/A
N/A
N/A
0
N/A
1,218
18
The property owner built a family room addition on his home.
The assessor determines that the addition has added
$25,000 true cash value to the property. Before construction
the assessed value was $45,000 and the previous taxable
value was $38,000. Assume that no value increase is
present due to general market factors.
19
2003 Equalization New = 25,000 X 0.50 = 12,500
2003 Capped Value Additions = 12,500
2003 Capped Value = (38,000 X 1.015) + 12,500 = 51,070
2003 AV (BOR) = 45,000 + (25,000 X 50%) = 57,500
2002
2003
AV
45,000
57,500
CV
38,000
51,070
TV
38,000
51,070
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
12,500
0
0
12,500
N/A
N/A
N/A
0
N/A
12,500
19
A property owner is building a house on his property. The
previous tax year the home was 80% complete and the
assessment was listed as $100,000, $95,000 taxable value.
The house was completed in April of last year. The assessor
determined that the amount of assessment represented by
completion of the construction is $25,000. Assume that no
value increase is present due to general market factors.
20
2003 Equalization New = 25,000
2003 Capped Value Addition = 25,000
2003 Capped Value = (95,000 X 1.015) + 25,000 = 121,425
2002
2003
AV
100,000
125,000
CV
95,000
121,425
TV
95,000
121,425
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
25,000
0
0
25,000
N/A
N/A
N/A
0
N/A
25,000
20
2003 Equalization New = ((40 Lots X 20,000) X 0.5) – 60,000 = 340,000
2003 Capped Value = 43,072 X 1.015 = 43,718
Note: Since there is no physical change (public improvements not added,
yet), there are no CV or Headlee Losses or Additions.
2002
2003
AV
60,000
400,000
CV
43,072
43,718
TV
43,072
43,718
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
340,000
0
0
0
N/A
N/A
N/A
0
N/A
0
Capped value additions do not result from the platting, splitting, or
combining of a parcel of land. There are no Headlee Additions on this
property; there were no physical changes. The taxable value is affected
only by the capped value formula.
21
This problem illustrates the procedure to follow when
there is an increase in value due to platting which does
not affect the capped value additions or Headlee
Additions plus physical improvements to the site that do
affect the capped value additions and Headlee Additions
(see STC Bulletin 3 of 1995).
22
A developer has owned a parcel of land classed residential
for 5 years. A plat was filed for this 80-acre parcel in early
2002. It includes 200 residential parcels. The developer has
installed streets, sidewalks, electric distribution system,
water and sewer. Examination of cost data and market data
from other recently completed subdivisions causes the
assessor to determine that the new improvements add
$25,000 in assessed value per lot. Lot values are
determined to be $35,000 assessed value each. Remember
that there are no splits involved and the assessor values the
entire parcel as a single entry on the assessment roll.
22
2002 AV = 60,000
2002 TV = 43,072
Equalization New = (200 Lots X 35,000) – 60,000 = 6,940,000
Capped Value Addition = 200 Lots X 25,000 = 5,000,000
Capped Value = (43,072 – 0) X 1.015 + 5,000,000 = 5,043,718
Headlee Additions = 5,000,000
2002
2003
AV
60,000
7,000,000
CV
43,072
5,043,718
TV
43,072
5,043,718
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
6,940,000
0
0
5,000,000
N/A
N/A
N/A
0
N/A
5,000,000
22
The assessor discovered a garage that was built in 2001
without benefit of a building permit and was omitted from the
2002 assessment roll. The assessor petitioned the State Tax
Commission through MCL 211.154 to add $10,000 to the
2002 assessment and tax roll. The State Tax Commission,
on February 11, 2003 issued an order supporting the
assessor’s position. Before the action of the State Tax
Commission, the 2002 assessed value was $50,000 and the
taxable value was $40,000. To simplify the problem, assume
that no value increase is present due to general market
factors.
23
2002 Revised Assessed Value = 50,000 + 10,000 = 60,000
2002 Revised Taxable Value = 40,000 + 10,000 = 50,000
2003 Equalization New = 10,000
2003 Capped Value = (50,000 - 0) X 1.015 + 0 = 50,750
Final 2002
2003
AV
60,000
60,000
CV
50,000
50,750
TV
50,000
50,750
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
10,000*
0
0
0
N/A
N/A
N/A
0
N/A
10,000*
Note: 2002 BOR value is fixed. The STC order causes a
revised tax bill to be calculated and a supplemental bill to be
sent to the property owner. The 2003 capped value formula
will begin with the revised taxable value.
23
* Although the Final 2002 AV is $60,000, the Form L-4021
shows values for each year as of the close of the March
Board of Review. So, the 2002 AV will appear as $50,000,
supporting the need for 10,000 Equalization New. Since the
current capped value is calculated using the prior year’s final
taxable value, there are no CV additions for the 2003-year.
However, since the garage value has not previously been
included in the rollback calculation, there must be Headlee
and Truth in Taxation additions for 2003. Similar procedures
are to be followed for changes ordered by the July or
December Board of Review and the Michigan Tax Tribunal
provided the changes constitute additions such as the
missing garage.
23
The owner of an office has filed a Personal Property
Statement both for the year 2002 and the year 2003. There
were no acquisitions of new property during the year 2002.
The costs reported by the taxpayer are identical for both
years (as to amount and acquisition year), but in 2002 the
property was reported in Section D of form L-4175 and in
2003 the property was reported in Section B. Investigation
discloses that the identity of the property has not changed
and that Section B is the correct Section for reporting the
property. In 2002 the SEV and Taxable value for the
property was $26,000. In 2003, the calculated SEV is
$31,000.
24
2003 Equalization New = 5,000
2003 CV Addition = 5,000 (see page 8 of STC Bulletin 12 of 1999)
2003 Headlee Additions = 5,000
2002
2003
AV
26,000
31,000
CV
26,000
0
TV
26,000
31,000*
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
5,000
0
N/A
0
N/A
N/A
N/A
0
N/A
5,000*
The incorrect report resulted in omitted property which, in turn, is treated as
Headlee Additions. Notice that omitted property is considered a “move-in” (see
page 3 of STC Bulletin 19 of 2002). Notice also that the Assessor should file a
petition with the State Tax Commission to add omitted property for 2002,
pursuant to MCL 211.154.
*Note: One could argue that the amount of the addition for Headlee purposes is
more than $5,000 because it should be calculated after the current year’s
depreciation has been taken. However, the result may be additional precision,
which is not warranted by the situation.
24
Same facts as 24 above, except the property has been
reported in Section B for the 2003 assessment year arising
from the fact that the Assessor directed such reporting in
light of a determination from the State Tax Commission that
Section B was the correct section for reporting, starting in
2003, rather than Section D.
25
2003 Equalization New = 5,000
2003 Capped Value = No Additions or Losses
2003 CV = (26,000 – 0) X 1.015 + 0 = 26,350
2003 Headlee Additions = No Additions or Losses
2002
2003
AV
26,000
31,000
CV
26,000
26,350
TV
26,000
26,350
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
5,000
0
N/A
0
N/A
N/A
N/A
0
N/A
0
For Equalization, the practice is to net all assessment changes from one year to
the next. As the result, the 5,000 increase in SEV that has occurred is treated as
Equalization New. However, since the Assessor’s Investigation discloses that
the identity of the property has not changed between 2002 AND 2003, the
increase in value for the 2003 year is neither Capped Value additions nor
Headless Additions.
The increase in value was occasioned by the
implementation of a more refined valuation method, not by the appearance of
property that was not valued the previous year.
25
Note: this example applies to the vast
majority of personal property parcels.
Same numbers as 24 above except that the increase in assessment
was occasioned by the fact that there were new acquisitions
reported on the 2002 acquisition year line, which resulted in the
calculation of an SEV of $7,000 attributable to such new property.
26
2003 Equalization New = 5,000
2003 Capped value - No Capped Value calculation should be made*.
2003 Headlee = No Losses, since previously existing property is same as
last year (it has merely declined in value), and 7,000 Additions occasioned
by the new acquisition, which is treated as a “move-in”.
2002
26,000
2003
31,000
AV
CV
TV
26,000
31,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
5,000
N/A
N/A
N/A
N/A
0
N/A
7,000
* No Capped Value calculation should be made because the property that was
present in 2002 has reduced in value. Applying the Addition that results from the
new acquisition reported on the 2002 line of the personal property statement to
the capped value formula (there are no losses) will normally result in a value that
is greater than what would result using the assessed value (tentative SEV). See
Bulletin 1 of 2000.
26
The equalization department utilized the prior year’s Form L4023 line 8 values as the beginning ratio of 50% for the
current year’s Industrial Classification. The improving
economy has created a higher demand for factories in the
vicinity. The assessor studies the market and determines
that the land value has increased from $5,000 per acre to
$8,000 per acre. A ten-acre parcel last year was assessed at
$25,000. This year the assessor places a $40,000
assessment on it. The previous taxable value is $24,000.
27
2003 Equalization New = 40,000 – 25,000 = 15,000
2003 Capped Value = (24,000 –0) X 1.015 + 0 = 24,360
2002
2003
AV
25,000
40,000
CV
24,000
24,360
TV
24,000
24,360
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
15,000
0
0
0
N/A
N/A
N/A
0
N/A
0
The Equalization Department study was not a reliable and
accurate study and did not measure the increasing market
value in this classification therefore the added value is
recorded as Equalization New, not Equalization Plus
Adjustment (see page 5, paragraph b, of STC Bulletin 13 of
1996). This type of new value is not capped value additions.
Since there was no physical change, there are no Headlee
Additions for this property.
27
In 2001 lighting struck a barn and caused a fire that
completely destroyed it. In 2002 the barn was replaced with
a similar building. The assessor’s record indicates that the
true cash value of the destroyed barn was $12,000. The
replacement barn’s 2003 true cash value is $20,000. Last
year the total true cash value was $120,000 and the taxable
value was $40,000. (See page 15 of STC Bulletin 3 of 1997
and page 9 of STC Bulletin 3 of 1995).
28
2003 Capped Value Addition of
Replacement Construction
= 12,000 X (40,000  120,000) X 1.015
= 12,000 X 0.3333 X 1.015 = 4,060
TV of New Construction Value
Total Capped Value Addition
= (20,000 – 12,000) X 0.50 = 4,000
= 4,000 + 4,060 = 8,060
2003 Capped Value = (40,000 X 1.015) + 8,060 = 48,660
2003 AV (BOR) = 60,000 + (20,000 X 50%) = 70,000
2002
2003
AV
60,000
70,000
CV
40,000
48,660
TV
40,000
48,660
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
10,000
0
0
8,060
N/A
N/A
N/A
0
N/A
8,060
Note: See 1997 Supplement to Bulletin 3 of 1995, page 9. The
replacement cost that is capped is limited to the original value of
the destroyed property. Any value over and above the destroyed
value is capped value additions. In this example 50% of the
value (over and above the replacement construction value)
($20,000 – $12,000 = $8,000) is $4,000.
28
Non-Consideration of Normal Repair, Replacements,
and Maintenance
A property owner performed certain work in 1990 that qualified for the
exemption provided by MCL 211.27(2) known as the Mathiew-Gast
Act. The TCV of the exempt improvements is $24,000 as of 12-312002. The property transfers ownership in 2002. The assessor adds
$5,000 Equalization Plus Adjustment to the 2003 Assessment Roll
indicated by the local market study. The following are listed on the
2002 assessment roll:
2002 AV
2002 CV
2002 TV
65,000
42,250
42,250
29
2003 TCV
164,000
2003 AV
82,000
2003 Equalization New
2003 Headlee Additions
82,000 – 65,000 – 5,000 = 12,000
SEV of previously exempt property
(same as Equalization New)
2002
2003
Loss/Losses +/-Adjustment New/Additions
AV
65,000
82,000
0
5,000
12,000
CV
42,250
N/A – there was a T of O in 2002, TV = SEV
TV
42,250
82,000
N/A
N/A
N/A
For MRF and Truth in Taxation
0
N/A
12,000
Note:
29
Note: MCL 211.29(2) … The increase in value attributable to the
items included in subdivisions (a) to (o) that is known to the assessor
and excluded from true cash value shall be indicated on the
assessment roll. This section applies only to residential property. …
The assessor must indicate on the assessment roll or other record
(Form 865 formally L-4293) the amount not considered if that value is
to be included as Headlee Additions for use in rollback calculations. If
the value is not on the assessment roll, the assessor should supply
the equalization department with a copy of the original record used to
track the non-consideration. It is vital that the assessor keeps
accurate records.
Note: In the year following a sale, when the value of normal repairs,
replacement and maintenance made by the seller returns to the
assessment roll, an addition shall be calculated. The amount of the
addition shall be 50% of the true cash value of the previously exempt
property. This subject is discussed in detail in STC Bulletin 17 of
1995.
29
Equalization
Loss
The property owner requests his property be split into two
forty-acre parcels. The eighty-acre parcel was assessed at
$40,000. The assessor retires the parcel number for the
eighty-acre parcel and creates two new numbers for the
forty-acre parcels. This is the procedure approved by the
State Tax Commission. Assume no change in value due to
general market factors for this property. The value per acre
of a 40-acre parcel is the same rate as eighty-acre parcels.
The previous taxable value is $30,000.
30
The original parcel is retired:
2002
2003
AV
40,000
0
CV
30,000
0
TV
30,000
0
For MRF and Truth in Taxation
30a
Loss/Losses +/-Adjustment New/Additions
40,000
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Child Parcel – (Child Parcel 30b is treated the same as Child Parcel 30a)
2003 Assessed Value =
2003 Capped Value =
20,000
30,000 X (40,000  80,000) = 15,000
(this is the TV allocated to 2002)*
= 15,000 X 1.015 = 15,225
*Note: the allocation of the prior year’s taxable value is
based on the ratio of the prior year’s TCV of the Child
Parcel to the prior year’s TCV of the Parent Parcel
Note: there are no Headlee Losses or Additions – there
was no physical change to the property.
30
Child Parcel 30a and 30b are treated in the same manner
2002
2003
AV
0
20,000
CV
0
15,225
TV
15,000
15,225
(allocated)
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
20,000
0
0
0
N/A
N/A
N/A
0
N/A
0
This change did not involve a transfer of ownership. The sum of the 2002
allocated TVs of the child parcels must equal the parent parcel’s 2002 taxable
value.
30
The assessor made a complete review of the classification of
properties on the assessment roll. During the review process
the assessor determines that the highest and best use as
well as the current market for a parcel of land is recreational
use and changes the classification from Agricultural to
Residential. The previous assessment was $25,000 and the
new assessment is $30,000. The previous taxable value is
$15,000.
31
2003 Capped Value = 15,000 X 1.015 = 15,225
2002
2003
Loss/Losses +/-Adjustment New/Additions
AV
25,000 Ag 30,000 Res
25,000 Ag
0
30,000 Res
CV
15,000
15,225
0
0
0
TV
15,000
15.225
N/A
N/A
N/A
For MRF and Truth in Taxation
0
N/A
0
The Agricultural Class incurs a 25,000 Equalization Loss
while the Residential Class receives a 30,000 Equalization
New. There are no Headlee Losses or Additions because
there was no physical change to the property. There are no
Capped Value Losses or Additions.
The Equalization Loss occurs in the Agricultural
Classification and is carried through to forms L-4022 and L4023. The Equalization New applies to the Residential
Classification and is carried through to forms L-4022 and L4023.
31
A property owner applies to the township supervisor for a
poverty exemption. The supervisor investigates the request
and supports the exemption. The March Board of Review
concurs and a total exemption is granted. The previous
assessed value is $50,000 with a $37,000 taxable value.
32
2002
2003
AV
50,000
0
CV
37,000
0
TV
37,000
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
50,000
0
0
0
0
0
N/A
N/A
N/A
37,000
N/A
0
32
A property consisting last year of $20,000 assessed
value for land and $80,000 assessed value for a
house on the land suffers a fire that completely
destroys the house. The previous taxable value for
the property is $75,000. The land value has not
increased since last year.
33
2003 Equalization Loss = 80,000
2003 Capped Value Losses = 160,000 X (75,000  200,000) = 60,000
2003 Capped Value = (75,000 – 60,000) X 1.015 + 0 = 15,225
2003 Headlee Losses = 160,000 X (75,000  200,000) = 60,000
2002
2003
AV
100,000
20,000
CV
75,000
15,225
TV
75,000
15,225
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
80,000
0
0
60,000
0
0
N/A
N/A
N/A
60,000
N/A
0
33
While reviewing her assessment, a property owner discovers
that the storage building built by her neighbor in 2001 has
been valued as part of her property in 2002. The property
owner appeals to the State Tax Commission under MCL
211.154. The State Tax Commission orders the value
removed from the property owner’s assessment and adds
the value to the neighbor’s assessment. The assessed value
of the storage building in 2002 is $15,000. The original
(2002) assessed value of this property is $95,000 with a
$75,000 taxable value. This property did not change in value
due to general market factors since last year.
34
2002 Revised Taxable Value = 75,000 – 15,000 = 60,000
2002 Final Taxable Value = 60,000
2002 Revised Assessed Value = 95,000 – 15,000 = 80,000
2003 Capped Value = (60,000 – 0) X 1.015 + 0 = 60,900
Equalization Loss is 15,000
Headlee Losses is 15,000
AV
CV
TV
2002 Revised 2003
95,000 80,000 80,000
75,000 60,000 60,900
75,000 60,000 60,900
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
15,000
0
0
0
0
0
N/A
N/A
N/A
15,000
N/A
0
The Final 2002 Taxable Value of $60,000 will be used as the starting point in the
calculation of the 2003 Capped Value.
34
The owner of an office has filed a Personal Property
Statement both for the year 2002 and the year 2003. There
were no acquisitions of new property during the year 2002.
The costs reported by the taxpayer are identical for both
years (as to amount and acquisition year), but in 2002 the
property was reported in Section B of Form L-4175 (Form
632) and in 2003 the property was reported in Section D.
Investigation discloses that the identity of the property has
not changed and that Section D is the correct Section for
reporting the property. In 2002 the SEV and Taxable value
for the property was $31,000. In 2003, the calculated SEV is
$26,000. No “move-in” form has been filed.
35
2003 Equalization Loss = 5,000
2003 Capped Value = No calculation is necessary since previously
existing property (property present for the 2002 assessment) has
declined in value.
2003 Headlee = No Additions or Losses
2002
31,000
2003
26,000
AV
CV
TV
31,000
26,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
5,000
0
0
N/A
N/A
N/A
N/A
0
N/A
0
It is typically not necessary to calculate capped value on
personal property, for the reason that, as is true under the
facts described above, it declines in value from one year to
the next. Since an audit has occurred, which has disclosed
that the property reported in Section B in 2002 is the same
as the property reported in Section D in 2003, there are no
Headlee Losses.
35
Same facts as 34 above, except the property has previously
(2002) been correctly reported in Section B and the reporting
has been changed to Section D in light of a determination
from the State Tax Commission that the property in question
should henceforth (for 2003 and thereafter) be reported in
Section D.
36
2003 Equalization Loss = 5,000
2003 Capped Value = No calculation is necessary since previously
existing property (property present for the 2002 assessment) has declined
in value.
2003 Headlee = No Additions or Losses
2002
31,000
2003
26,000
AV
CV
TV
0
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
5,000
0
0
N/A
N/A
N/A
N/A
0
N/A
0
The result is the same as it would be in the solution to 35
above except that, since there was no incorrect report in
2002, no MCL 211.154 petition can be filed.
36
Same facts as 34 above, except that no audit was conducted
and the assessor has no facts to indicate that the property
reported in Section B in 2002 was the same as the property
reported in Section D in 2003.
37
2003 Equalization Loss = 5,000
2003 Capped =No calculation is necessary since previously existing
property (property present for the 2002 assessment) has declined
in value.
2003 Headlee = No Additions, but Losses of 5,000.
2002
31,000
2003
26,000
AV
CV
TV
31,000
26.000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
5,000
0
0
N/A
N/A
N/A
N/A
5,000
N/A
0
37
Non-Consideration
of Normal Repair,
Replacement, or
Maintenance
The property owner replaces the heating system in his
single-family rental property in 2002. He completes a
Form 865 (formerly L-4293) indicating cost figures of
$8,500. The Assessor completes a “before
replacement” appraisal and an “after replacement”
appraisal that indicates a market value difference due
to the new heating system of $5,000 (TCV). There is a
$6,500 Equalization Plus Adjustment indicated by
market studies. The 2003 TCV is $188,000.
2002 AV = 85,000
2002 CV = 60,000
2002 TV = 60,000
38
2003 Equalization Plus Adjustment = 6,500
2003 Equalization Loss = 0
2003 Equalization New = 0
2003 AV = 85,000 + 6,500 = 91,500
2003 CV = (60,000 – 0) X 1.015 + 0 = 60,900
2003 TV = 60,900
2002
2003
AV
85,000
91,500
CV
60,000
60,900
TV
60,000
60,900
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
6,500
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: If the repairs, replacement and/or maintenance were
performed in the year immediately preceding the current
assessment year, they would not be included in the prior
year's assessed value (because they haven't had a chance
to be included yet) and an assessment REDUCTION for the
exemption from the prior year shall NOT be made. Likewise,
there would not be a loss for equalization purposes. (STC
Bulletin 17 of 1995)
38
In 2002 a property owner completed a Form 865 (formerly L4293) indicating he has made $18,000 (TCV) worth of
qualified repairs and maintenance during the 1998 through
2001 time period. The assessor completes a “before
replacement” appraisal and an “after replacement” appraisal
that indicates a market value difference due to the qualified
items of $8,000 (TCV). Equalization studies indicate that
there is a $4,000 increase in value (TCV) due to general
market conditions.
2002 AV = 45,000
2002 CV = 38,000
2002 TV = 38,000
39
2003 Equalization Loss = 8,000 X 50% = 4,000
2003 Equalization New = 0
2003 Equalization Plus Adjustment = 4,000 TCV X 50% = 2,000
2003 AV = 45,000 – 4,000 + 2,000 + 0 = 43,000
The amount of the loss in the capped value formula for the current year is
calculated as follows:
Loss = TCV of the Exempt Portion of the Property in the Prior Year
X (Taxable Value of the entire property in the prior year 
TCV of the entire property in the prior year)
2003 CV Losses = 8,000 X (38,000  90,000) = 3,378
2003 CV = (38,000 – 3,378) X 1.015 + 0 = 35,141
2002
2003
AV
45,000
43,000
CV
38,000
35,141
TV
38,000
35,141
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
4,000
2,000
0
3,378
N/A
0
N/A
N/A
N/A
3,378
N/A
0
39
Note: If the repairs, replacement and/or maintenance were
performed over many years in the past and a first time
request for non-consideration is now being made for the
current assessment year, an assessment reduction from the
prior year shall be made assuming that the value of the
exempt items was included in the prior year's assessed
value. In this situation there would be a loss for equalization
purposes. The amount of the loss is based on the True Cash
Value of the exempt items included in the prior year's
assessed value.
39
Other Situations and Combinations
A number of these problems are supplied for demonstration
purposes only. Some actions by the Assessor are contrary to
State Tax Commission procedures (such as the failure to
retire the parent parcel when that parcel is split or failure to
retire original parcel numbers when two or more parcels are
combined in an assemblage). While these actions on the
part of the Assessor should not occur, Equalization Loss,
Adjustment, New, Capped Value Losses and Additions, and
Headlee Losses and Additions must still be properly
accounted for on Forms L-4021, L-4022, and L-4023.
A uniform 20-acre parcel assessed at $2,000 per acre is split
and a 5-acre parcel is sold in 2002. The original taxable
value of the 20-acre parcel is $15,000. In 2003 the assessor
assesses the 15-acre residual parcel at $2,200 per acre and
the 5-acre new parcel at $3,500 per acre. Contrary to State
Tax Commission advice the assessor did not retire the
parent parcel identification number.
40
Parent Parcel:
2002 AV (BOR) = 20 acres X 2,000 = 40,000
2002 TV = 15,000 (given)
2003 AV (BOR) = 15 acres X 2,200 = 33,000
2003 Equalization Loss = 5 acres X 2,000 = 10,000
Note: the Equalization Loss for the split is taken at the
previous year’s prorated assessed value. Loss is accounted
for on Form L-4023 before Equalization Adjustments. The
Equalization New is taken after Equalization Adjustments.
The TCV on the form L-4023 is the result of the new
assessed value divided by the ratio determined after the
Equalization Adjustments are made.
40
2003 Equalization Plus Adjustment = 15 acres X 200 = 3,000
Parent parcel’s 2002 TV allocated to the 2003 CV formula:
2003 allocated TV = 15,000 X (60,000  80,000) = 11,250
2003 Capped Value = (11,250 – 0) X 1.015 + 0 = 11,419
Parent Parcel (and Residual of Parent Parcel)
2002
2003
AV
40,000
33,000
CV
15,000
11,419
(allocated 11,250)
TV
15,000
11,419
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
10,000
3,000
0
0
0
0
N/A
0
N/A
N/A
N/A
0
There are no Headlee Losses on this property, no physical
change or exemption occurred. There are no Capped Value
losses.
40
Child Parcel:
2003 AV (BOR) = 5 acres X 3,500 = 17,500
2003 Equalization New = 17,500
2003 Capped Value = Does not need to be calculated. Transfer of
Ownership means the Taxable Value will equal the SEV.
Split Parcel (New Parcel)
2002
2003
AV
0
17,500
CV
0
xxxxxx
TV
0
17,500
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
17,500
0
0
0
N/A
N/A
N/A
0
N/A
0
There are no Headlee Additions to this property. There was
no physical change or return from an exemption.
40
Combination without a Transfer of Ownership
A farmer has two parcels of adjacent vacant land each 80acres and each with a $120,000 assessed value and a
$90,000 taxable value in 2002. He requests that the
assessor combine the two parcels for 2003. Contrary to
State Tax Commission policy, the assessor combines both
parcels under the parcel code number of one of the existing
parcels. The assessor does not change the acreage rate
between 2002 and 2003. The 160-acre rate is the same as
the 80-acre rate.
41
41a. Original Parcel Removed.
2002 AV (BOR) = 120,000
2002 TV = 90,000
2003 AV (BOR) = 120,000 – 120,000 = 0
2003 Equalization Loss = 120,000
2003 Capped Value = N/A, SEV = 0 will become TV
2002
2003
AV
120,000
0
CV
90,000
0
TV
90,000
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
120,000
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: There are no Headlee Losses to this property. There
was no physical change or exemption granted.
41a
41b Original Parcel plus Combined Parcel
2002 AV (BOR) = 120,000
2002 TV = 90,000
2002 Allocated TV = 90,000 + 90,000 = 180,000
2003 AV (BOR) = 120,000 + 120,000 = 240,000
Equalization New = 120,000 (the parcel 41a combined with parcel 41b)
2003 Capped Value = (180,000 X 1.015) = 182,700
2002
2003
AV
120,000
240,000
CV
90,000
182,700
TV
90,000
182,700
(allocated 180,000)
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
120,000
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: There are no Headlee Additions to this property. There
was no physical change or return from an exempt status.
41b
Parcel 42a.
2002
2003
AV
100,000
0
CV
80,000
0
TV
80,000
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
100,000
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: There are no Headlee Losses to this property. There
was no physical change or exemption granted.
42a
Parcel 42b.
2002
2003
AV
19,000
0
CV
17,000
0
TV
17,000
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
19,000
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: There are no Headlee Losses to this property. There
was no physical change or exemption granted.
42b
Parcel 42c.
2003 AV (BOR) = 100,0001 + 5,0002 + 20,0003 = 125,000
2003 Equalization New = 125,000 (parcel did not previously exist)
2003 Capped Value Additions = 0
2003 Capped Value for the non-transferred parcel =
= (80,000 –0) X 1.015 + 0 = 81,200
2003 Capped Value total = 81,200 + 20,000 = 101,200
2003 TV of combined parcel = lessor of 2003 SEV or the CV of nontransferred parcel, plus the 2003 SEV of the transferred parcel.
2003 TV = 81,200 + 20,000 = 101,200
1
Parcel 42a 2002 AV
The Equalization Adjustment that would have been applied to previous
Parcel 42a for 2003 if the parcel was not retired.
3
AV of recently purchased Parcel 42b
2
Parcel 42c.
2002
2003
AV
0
125,000
CV
0
101,200
TV
0
101,200
(97,000)*
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
125,000
0
0
0
N/A
N/A
N/A
0
N/A
0
*Allocated 80,000 + 17,000 = 97,000
42c
To avoid this complexity, some assessors choose to wait a
year before combining non-transferred parcels with parcels
that experienced a ‘transfer of ownership’.
Note: Although Parcel 42c is New and all of the value should
be reported as Equalization New the Capped Value Formula
must use the 2002 taxable value attributed to the original
parcel 42a. The value attributable to parcel 42a does not
involve physical change or transfer of ownership items and
thus does not incur Capped Value Losses or Additions. For
the non-transferred portion of the newly combined parcel,
since the 2003 CV is less than the SEV for the nontransferred parcel, the CV becomes the allocated amount
toward the 2003 TV. For the portion that experienced a
‘transfer of ownership’, the 2003 SEV becomes the allocated
amount toward the 2003 TV. The 2003 TV is the sum of the
preceding two allocated amounts.
42c
Property moving from taxable status
to non-taxable status
The Township purchased a privately owned lot and erected
a township fire station. The 2002 assessed value of the lot
was $20,000 and the taxable value was $18,000. The
Township purchased the property in an arms-length
transaction during July of 2002 for $50,000
43
2002
2003
AV
20,000
0
CV
18,000
0
TV
18,000
0
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
20,000
0
0
18,000
0
0
N/A
N/A
N/A
18,000
N/A
0
Note: The Headlee Losses are the previous Taxable Value
because the parcel has now been moved to Exempt status.
43
Property moving from tax exempt
status to taxable status
In 2002, a local Church sold its parsonage. The
assessor determined that the true cash value of the
house and lot for 2003 is $70,000 ($35,000 SEV)
44
2003 Equalization New = 35,000
2003 Taxable Value is the 2003 SEV
2003 Headlee Addition is the 2003 SEV
2002
2003
AV
0
35,000
CV
0
35,000
TV
0
35,000
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
35,000
0
0
35,000
N/A
N/A
N/A
0
N/A
35,000
44
BOARD OF REVIEW
CHANGES
March Board or Review
The property owner of a residence constructed in 2001, after
review of the assessment records, appeals the assessment
to the 2003 March Board of Review. The contention is that
the assessor treated a glass-enclosed porch as living space
in the assessment. The 2002 assessed value (SEV) is
120,000; the taxable value is 110,000. The March Board of
Review instructs the assessor to correct the error. For this
example there is no increase in value attributable to general
market factors. The 2002 assessed value of the land is
$20,000 and of the residence, $100,000. The assessor
recalculates the square footage for rates and revalues the
residence at $95,000 (SEV) for 2003.
45
2003 AV (BOR) = 95,000 + 20,000 = 115,000
2003 Equalization Loss = 100,000 – 95,000 = 5,000
2003 Capped Value Losses = 10,000 X (110,000 ÷ 240,000) = 4,583
2003 Capped Value = (110,000 – 4,583) X 1.015 + 0 = 106,998
2002
2003
AV
120,000
115,000
CV
110,000
106,998
TV
110,000
106,998
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
5,000
0
0
4,583
0
0
N/A
N/A
N/A
4,583
N/A
0
Note: The value removed by the 2003 March Board of
Review was originally added to the 2002 roll as New and
Additions, therefore the value is removed as a Loss for
Equalization purposes and as Losses for Capped Value and
Headlee purposes.
45
Note: The 2003 March Board of Review does not
have the authority to change the 2002 values. The
2003 July and December Board of Reviews do not
have the authority to make this correction for 2002 or
2003 because the error is not the result of a clerical
error or a mutual mistake of fact as defined by court
cases nor is it an exemption matter.
45
A property owner appears before the March Board of Review
to appeal his assessment. The 2002 Assessment was
$55,000 and the Taxable Value was $40,000. The Assessor
increased the 2003 assessment to $60,000 applying
Equalization Plus Adjustment of $5,000. The March Board of
Review determines that the 2003 assessment should be
$52,000 and makes that order.
46
2003 Equalization Plus Adjustment by Assessor = 5,000
2003 Equalization Minus Adjustment by BOR = – 8,000
2003 Capped Value = (40,000 – 0) X 1.015 + 0 = 40,600
2002
2003
AV
55,000
52,000
CV
40,000
40,600
TV
40,000
40,600
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
-3,000
0
0
0
0
N/A
N/A
N/A
0
N/A
0
Note: There was no physical or exemption change to this property
therefore there can be no Equalization Loss or Headlee Losses. The
change is reflected as Equalization Adjustment. The difference
between the 2002 Assessed Value and the 2003 Assessed Value as
adjusted by the March Board of Review is $3,000 (Equalization Minus
Adjustment).
Note: The Taxable Value in this problem is not affected by the change
in assessed value as determined by the March Board of Review. The
Capped Value formula must begin with the previous year’s Taxable
Value; there are no Capped Value Losses or Additions for this
property.
46
The assessor, in a drive by review of properties on December 30,
2002, notices that a new storage building was built on Mr. Smith’s
property. The assessor checks his file of building permits and finds
none for this property. No one is home during several attempts to
speak with Mr. Smith so the assessor measures the storage building
and adds $7,500 to the assessment. Mr. Smith’s 2002 assessed
(SEV) was $57,500 and the taxable value was $44,600. Assume no
general market change for 2003 over 2002. The assessor’s data prior
to the March Board of Review indicates the following:
2003 Equalization New = 7,500
2003 Headlee Additions = 7,500
2003 Capped Value = (44,600 – 0) X 1.015 + 7,500 = 52,769
2002
2003
AV
57,500
65,000
CV
44,600
52,769
TV
44,600
52,769
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
7,500
0
0
7,500
N/A
N/A
N/A
0
N/A
7,500
47
Mr. Smith appears before the 2003 March Board of Review to obtain
an explanation of the increase in Taxable Value reported on the
Assessment Change Notice he received in February. It is discovered
that the storage building the assessor added to his property was
actually on the neighbor’s (Mr. Jones) property and that Mr. Jones did
have a building permit issued for that construction. It was further
discovered that the assessor did not add value to Mr. Jones’
assessment. The assessor’s data for Mr. Jones (pre-March Board of
Review) is:
Capped Value = (50,000 – 0) X 1.015 + 0 = 50,750
2002
2003
AV
60,000
60,000
CV
50,000
50,750
TV
50,000
50,750
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
How does the 2003 March Board of Review make the
corrections?
47
The Board makes the correction by changing Mr. Smith’s
2003 AV (BOR) from $65,000 to $57,500 and re-calculates
the Capped Value formula:
Capped Value = (44,600 – 0) X 1.015 + 0 = 45,269
Mr. Smith’s Property:
2002
2003
AV
57,500
57,500
CV
44,600
45,269
TV
44,600
45.269
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
0
0
0
0
N/A
N/A
N/A
0
N/A
0
47
Mr. Jones’ Property:
2003 AV (BOR) = 60,000 + 7,500 = 67,500
2003 Equalization New = 7,500
2003 Capped Value Addition = 7,500
2003 Capped Value = (50,000 – 0) X 1.015 + 7,500 = 58,250
2003 Headlee Additions = 7,500
2002
2003
AV
60,000
67,500
CV
50,000
58,250
TV
50,000
58,250
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
7,500
0
0
7,500
N/A
N/A
N/A
0
N/A
7,500
Note: The 2003 March Board of Review must notify Mr.
Jones of the change and allow him an opportunity to appear
before the Board.
The 2003 Equalization process will continue as normal using
the March Board of Review values.
47
BOARD OF REVIEW CHANGES
July/December
Board of Review
A property owner notifies the Township Supervisor and the
Assessor that he would like to appeal an error in his
assessment to the 2003 December Board of Review. He
indicates that he has been studying his assessment record
card and discovered that the assessor has charged him with
three full bathrooms but he has only two full bathrooms plus
a half bath. The difference between a full bath and a half
bath is $800 (true cash value).
The assessment data used indicates the following:
2002 AV (BOR) = $110,000
2003 AV (BOR) = $115,000
2002 TV = $82,000
2003 TV = $83,230
What action does the December Board of Review take?
48
The December Board of Review indicates that they do not
have jurisdiction over this type of error. This is a valuation
dispute that should have been brought to the attention of the
2003 March Board of Review. The Board of Review should
notify the assessor of the error so that the 2004 assessment
can be correctly calculated. A change is not made nor can a
change be made for 2003 or any previous year because of
this error because the property owner did not bring the
matter to the attention of previous March Board of Reviews.
Note: The July/December Board of Review’s jurisdiction is
limited to: Clerical Errors or Mutual Mistakes of Fact (as
defined by previous court cases); Poverty Exemption;
Principle Residence (Homestead) Exemption; Qualified
Agricultural Exemption.
48
CLERICAL ERROR
International Place Apartments
v
Ypsilanti Township
On March 29, 1996 the Michigan Court of Appeals clarified
the meaning of the term “clerical error” found in MCL
211.53b which authorizes the correction of a clerical error or
mutual mistake of fact by the July and December Boards of
Review. The Court of Appeals states that the July and
December Boards of review are allowed to correct clerical
errors of a typographical or transpositional nature. The
July and December Boards of review are NOT allowed to
revalue or reappraise property when the reason for the
action is that the assessor did not originally consider all
relevant information.
48
MUTUAL MISTAKE OF FACT
General Products Delaware Corporation
vs
Township of Leoni; County of Jackson
This case was precedent setting as the Tribunal defined
“mutual mistake of fact” as follows: “the fact or facts upon
which the erroneous belief is based must be an identifiable
thing common to both parties’ knowledge and awareness, be
within the contemplation of each party, be a ‘basic
assumption’ material to the mistake – and that each party
arrive at a substantially identical but erroneous conclusion
based upon that material fact or set of facts and that the
mistaken fact was the primary cause of, and had a ‘material
effect’ upon, the over-assessment and excessive tax
payment.”
48
In June of 2003, a property owner, after reviewing his
property record card, discovers that the assessor transposed
the numbers in the square footage of his home built in 2001
on land he purchased earlier that year. The size of the home
is 1,475 square feet. The assessor calculated the value
based on a size of 1,745 square feet.
The true cash value of the house reported in 2002 was
$225,000 with a land value of $50,000. The assessor placed
a $137,500 assessed value and a $137,500 taxable value on
the property in 2002. The assessor determined that the 2003
true cash value (prior to 2003 March Board of Review) is
$290,000 (5.5% general rate of increase for real estate in
township) with a capped value (taxable value) of $139,562.
The 2004 IRM is 1.023. The general rate of increase for real
estate for 2004 is 7%.
49
The 2003 July Board of Review indicated that the
TCV of the home should have been $200,000 in 2002
instead of $225,000. What can the July Board of
Review legally do and how will the assessor make
legally permissible corrections?
49
The July Board of Review has the authority to cause the
assessor to make the necessary changes to the parcel for
2002 and recalculate the taxable value because there was a
transpositional error. The County Treasurer then will issue a
refund to the property owner within 30 days. No changes are
made to the County or State Equalization numbers for 2002
or 2003 because the equalization process is already finished
as of the 2003 July Board of Review. The assessor will take
an Equalization Loss for the parcel in 2004 to reflect the
order made by the 2003 July Board of Review.
49
Assessor’s calculation before 2003 July Board of Review change:
2002 AV = (225,000 + 50,000) X 50% = 137,500
2002 Taxable Value = SEV (2001 T of O) = 137,500
2001
2002
AV
137,500
CV
0
TV
137,500
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
0
112.500*
0
0
112.500*
N/A
N/A
N/A
0
N/A
112,500*
*New Construction only
2003 AV = 137,500 X 1.055 = 145,063 say 145,100
2003 Equalization Adjustment = 145,100 – 137,500 = 7,600
2003 Capped Value = 137,500 X 1.015 = 139,562
2002
2003
AV
137,500
145,100
CV
137,500
139,562
TV
137,500
139,562
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
7,600
0
0
0
0
N/A
N/A
N/A
0
N/A
0
49
Assessor’s calculations after 2003 July Board of Review changes:
2002 BOR = 100,000 (house) + 25,000 (land) = 125,000 (instead of 137,500)
2002 Taxable Value = 125,000 (SEV)
2003 Equalization Plus Adjustment = (125,000 X 1.055) – 125,000 = 6,900
(rounded)
2003 AV (BOR) = 125,000 + 6,900 = 131,900
2003 Capped Value = 125,000 X 1.015 = 126,875
2002
2003
AV
125,000
131,900
CV
N/A
126,875
TV
125,000
126,875
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
0
6,900
0
0
0
0
N/A
N/A
N/A
0
N/A
0
2004 AV = 131,900 X 1.07 = 141,133 say 141,100
2004 Equalization Loss = 145,100 – 131,900 = 13,200 (reduction by July BOR)
2004 Capped Value = 126,875 X 1.023 = 129,793
2003
2004
AV
145,100
141,100
CV
126,875
129,793
TV
126,875
129,793
For MRF and Truth in Taxation
Loss/Losses +/-Adjustment New/Additions
13,200
9,200
0
0
0
0
N/A
N/A
N/A
12,687*
N/A
0
*Reduction in TV for reduction in square footage after May of 2003 is 12,687 (i.e.
139,562 – 126,875)
49
2002 Tax Refund = (137,500 – 125,000) X 2002 Millage Rate
2003 Tax Refund = (139,562 – 126,875) X 2003 Millage Rate
49
STATE TAX COMMISSION
AND
MICHIGAN TAX TRIBUNAL
Changes ordered by either the State Tax Commission or
the Michigan Tax Tribunal are treated and calculated in
the same manner as those described for the July or
December Board of Review.