What is the difference between Assessed and Taxable and Capped Value?
Assessed Value is defined in Michigan law as 50% of the property's True Cash Value. (Market Value)

Capped Value is defined basically as last year's taxable value times the inflation rate or 5% whichever is less. (exceptions are made if you put on an addition or tear something down)

Taxable Value is what you actually pay taxes on. Taxable value is defined as the lesser of either the Capped Value or the Assessed Value.

This system in the long run means that property owners start accumulating a "discount" on their property taxes because their Taxable Value is lower than the Assessed Value. The property will continue to benefit from this discount until the property is transferred. At that point the property "Uncaps" and the Taxable Value becomes equal to the Assessed Value for the year immediately following the transfer. From that point on, the cap is replaced and a new discount begins accumulating.

Show All Answers

1. I'm a first time property owner. What important information do I need to know.
2. What is the difference between Assessed and Taxable and Capped Value?
3. How is the inflationary (CPI) increase calculated?
4. I keep hearing the phrase "Arms-Length Transaction". What does that mean?
5. I just bought a new house, will the Assessed Value be half of what I paid for it?
6. What is a Principal Residence Exemption?
7. How do forclosure / short sales affect the value of my home?
8. Do I have to let the Assessor in my home or on my property?