Property Tax Due Dates
Summer property taxes are payable beginning July 1 and are due without interest or penalty by July 31.
Winter property taxes are payable beginning December 1 and are due without interest or penalty by December 31.
How Property Taxes are Calculated
Ann Arbor property owners receive property assessment and taxable value notification letters annually in March. The following information explains the factors involved in determining property assessments and the terminology used in this process.
Taxable value vs. assessed value
To understand how taxes are calculated, a look back at Michigan's history is in order. Until 1994, property in Michigan was assessed at half its market value for tax purposes. This is known as a property's assessed value (AV).
In 1994, Michigan voters passed Proposal A, which changed the state's constitution. Proposal A shifted some of the tax burden off of property and onto the sales tax, which rose from four ($0.04) to six ($0.06) cents on every dollar spent.
The result of this proposal was the development of a new way of calculating property taxes using what's known as a property's taxable value (TV). A property's taxable value is determined using one of the equations below (whichever one is less):
- (((Last year's taxable value) - (losses)) x (1.05)) + (additions);
OR
- (((Last year's taxable value) - (losses)) x (the rate of inflation)) + (additions).
Your taxable value cannot exceed your assessed value.
Under Proposal A, the growth of a property's taxable value is limited - or "capped" - with annual increases of not more than the lesser of 5 percent (5%) or the consumer price index (CPI), as adopted by the Michigan State Tax Commission.
Because of how taxable value is calculated, it is - in many cases - less than a property's assessed value. However, when a piece of property is sold or ownership is transferred, the property's taxable value becomes equal to the amount of its assessed value for the tax year following the year in which the sale or transfer took place. This is called "uncapping" a property's taxable value. After this has taken place, the lesser of 5 percent (5%) or the CPI applies to future increases in taxable value, until there is another sale or transfer of ownership of the property.
The taxable value for parcels in the City of Ann Arbor can be found on the parcel owner's annual tax bill or assessment change notice.
Property Assessment
Even though taxes are based on taxable value, the assessed value is still calculated each year so that property values can be uniformly assessed at 50 percent of market value, as required by the Michigan Constitution.
The City of Ann Arbor Assessor's Office annually assesses each property within the city using mass appraisal techniques. This involves studies and analysis of the local real estate market.
The city assessor also considers new construction, improvements to property (such as remodeling and additions), and demolition of structures when calculating additions and/or losses to property values.
What's a Mill?
The property tax rate in Michigan is referred to as a millage, and it's figured in mills. One mill is equal to 1/1,000 of a dollar. Or, more simply, for every $1,000 in taxable value, a property owner will pay $1 in property tax.
Estimating Your Taxes
Property owners can calculate their tax bill by multiplying their taxable value by the millage rate.
For example, if the city's millage rate is 53.0378 mills, property taxes on a home with a taxable value of $250,000 would be $13,260. The mathematical equation below illustrates how this is figured:
(53.0378/1,000) x $250,000 = $13,260
Administration fee
In addition to levying property taxes, the City of Ann Arbor levies an administration fee pursuant to
state law. This fee is based upon the amount of property tax paid and is limited to 1 percent. This helps cover the city's costs to determine and defend annual assessments and collect taxes for all taxing authorities.
To figure the amount due in administration fees on a home with a taxable value of $250,000, see the following example:
$13,260 property taxes x 0.01 = $132.60
Total taxes due
In the example above, the administration fee of $132.60 added to $13,260 in property tax would equal a total of $13,392.60 owed.
Estimating Taxes
The Michigan Department of Treasury has a Property Tax Estimator and Millage Rates calculator, which allows individual and business taxpayers to estimate their current property taxes. The link is provided below:
https://www.michigan.gov/taxes/property/estimator
Estimating Taxes on New Construction
Estimating tax liability for future years can be challenging because of the uncertainty of future millage rates and market conditions. It is even more apparent with new proposed or future construction projects based on the timing of the project completion in relation to the assessment cycle. However, applying the most recent millage rates to half of the projected value once the construction is completed would provide a reasonable estimate for future taxes. The formula is provided below:
50% of Estimated Market Value of the Improvement x Millage Rate/1,000 + 1% Administration Fee
A simple cost per square foot estimate could possibly be used to estimate market value of proposed new construction but is not universal. One dollar of construction cost does not always equate to One dollar increase in market value.
Permit value may also be a tool a taxpayer could use to estimate the increase in property taxes for the proposed development. While the permit value may provide the cost of the project, construction cost is an element of value, but it is not the same as value.
Depending on the individual project or taxpayer situation, an owner may consider obtaining an estimate of market value from their builder, appraiser, realtor, or from building costs. The formula for estimating property taxes would remain the same as referenced earlier.
Ultimately, the value of a property after construction is completed is determined by the market, which is recognized by Assessor's Office and represented as assessed value at 50% of the true cash value.
Personal Property Taxes and Business Owners
When a Business Closes
In the event a business closes, the business owner is still responsible for paying taxes for that year. For example, if the business owner had personal property in Ann Arbor on December 31, 2023, he or she is responsible for the 2024 summer and winter taxes.
To avoid paying personal property taxes for that business in future years, the business owner must take actions to delete the business from the city's tax roll. To do this, the business owner must provide written notification to the city's assessor's office and contact the city's treasurer's office to obtain a final bill.
No new equipment purchases
To avoid paying personal property taxes when they have not purchased any new equipment in the past two years, business owners must file a personal property statement with the city assessor's office.
Transferring ownership
If a business owner transfers ownership of the property, the tax liability transfers to the buyer, unless otherwise agreed to by the two parties. If the buyer purchases the equipment and has possession of it when taxes become delinquent (March 1), the city pursues collection by seizing the property from the buyer (the current owner). Therefore, if the business owner needs to know the amount of taxes due for the current year before selling, he or she should call the city assessor's office at 734.794.6530 to have a jeopardy assessment calculated. There is no proration of personal property taxes.
Eligible Personal Property Tax Exemption
In December of 2012, Governor Snyder signed into law 11 bills affecting the taxation of personal property. The majority of these Acts did not take effect until Dec. 31, 2015, for the 2016 Tax Year; further guidance on those Acts will be provided at a later date.
Read the bulletin in its entirety.
Tax Abatement
Tax Rate History
Property taxes are calculated by multiplying the taxable value of a property by the millage rate (tax rate). A mill is the rate local governments use to levy property taxes; it equals $1 of tax per $1,000 of taxable value. Each taxing unit establishes their own tax rate; the city does not determine tax rates for the other local taxing units, i.e., schools, county, etc.
Summary of Millages
This
2024 summary serves as a brief guide to assist in the understanding each millage levied on your City of Ann Arbor property tax bill.
Washtenaw County Millages
The millage rate for Washtenaw County shown on your tax
bill is an aggregate of the various millage rates that are established by law or authorized by a voted millage. This table is available to assist with reading your City of Ann Arbor property tax bills.
- Summer Tax Bill: The County tax portion of the Summer Tax bill is solely County Operating Taxes. This millage represents the entire operating millage established by State law, not to exceed 5.5 mills. It is listed on the Summer Tax bill only and is distributed directly to the County for public services.
- Winter Tax Bill: County operating tax is not included on the Winter Tax bill. All voted millages for the County are levied on the Winter Tax bill.
