Assessing

A Principal Residence Exemption (PRE) is a property tax benefit available in some U.S. states—most notably Michigan—that exempts a homeowner from paying a portion of local school operating taxes on their primary residence.

Requirements:

1. You must own and occupy the home as your primary residence.

2. You cannot claim a similar exemption on another property (in Michigan or another state).

3. You must file the appropriate form (e.g., Form 2368 in Michigan) with your local assessor.

On March 15, 1994, Michigan voters approved the Constitutional Amendment known as Proposal ‘A’.
Prior to Proposal ‘A’, property tax calculations were based on the Assessed Value.
Proposal ‘A’ established “Taxable Value” as the basis for the calculation of property taxes. This
meant there were now two values on property, Assessed Value and Taxable Value.
Increases in Taxable Value (after adjustments for additions and losses) are limited to the percent of
change in the rate of inflation (Annual Inflation Rate Multiplier) or 5%, whichever is lower.
The limit on Taxable Value increases does NOT apply to a property in the year following a transfer of
ownership (sale).

The Michigan Constitution requires property to be uniformly assessed at 50% of the usual selling
price, also referred to as True Cash Value (TCV).
Each tax year the Assessor determines the Assessed Value (AV) of each parcel of Real Property
based on the condition of the property as of December 31 (Tax Day) of the previous year. The
Assessed Value is guided by market conditions and property sales.

Anyone who disagrees with the tentative values of their property, either Assessed (AV) or Taxable
(TV), is encouraged to speak with the Assessor. If you still do not agree with the values, you are
encouraged to make an appointment to meet with the Board of Review at their meetings in March.
The dates and times are listed on the Assessment Change Notice which is mailed to all property
owners at the end of February each year. If you do not agree with the Board of Review decision, you
then have the right to appeal to the Michigan Tax Tribunal. This information is included on the
petition that is filled out for the March Board of Review.

A property is said to “uncap” the year after there is a change in ownership.  When an “uncapping” occurs, the property’s Taxable Value is “uncapped”, and made equal to the Assessed Value.

Taxable Value (TV) is the LESSER of the SEV or Capped Value, unless the property has had a
transfer of ownership.

The State Equalized Value (SEV) is the Assessed Value after adjustments by County and State
equalization.