In purchasing homes, taxes are essential figures buyers like yourself should take into account. As a future property owner, you must gather information on local taxes of counties and cities. Property tax rates are where the local government gets funding for local projects which can be a trivial expense or a financial struggle for homeowners. It is especially crucial in this case, as the state of Michigan has some of the highest property tax rates in the country. Michigan or the Great Lake State’s average effective property tax rate is 1.64%, which is a lot more than the national average of only 1.08%.
Despite the high property tax rate, Michigan homeowners are protected by the constitution of the state from a significant increase in their property taxes. The general sales tax rate of Michigan state is 6%. Fortunately for Michigan residents, the taxable value of properties within the state is only allowed to rise by no more than 5% from one year to the next. The city of Livonia, Michigan, does not enforce a city sales tax for its residents’ properties. For Michigan homeowners, this means that taxes remain relatively steady despite the surging home values.
In the city of Michigan, two different numbers reflect on your home’s value on the property’s tax bill. The first value home buyers should take into account is the assessed value. Michigan property’s assessed value is equal to 50% of the market value. The assessor determines the assessed value by factors like size, features, and compared prices of other recently sold houses with the same features.
The second number significant in purchasing properties is the taxable value. The taxable value of your new home is equal to the assessed value. Upon purchase, however, the taxable value does not necessarily equal the amount of assessed value as Michigan limits the growth of taxable value to only 5% or the level of inflation, or whichever is lower. But if homeowners choose to upgrade the property’s features, these may add more value to the property.