Property Taxes

cityhallTaxes are payable on all residential properties in the City of Farmington Hills. How much each property owner pays compared to their neighbors depends on the Taxable Value of the property. Each February, property owners receive a Notice of Assessment, Taxable Valuation and Property Classification notice.

 

Understanding Your Notice of Assessment

assessment form lgThis document shows an example of a Notice of Assessment for a WoodCreek property, this one happens to be for 2014. Tap or click the image to see an enlarged version. The numbered red circles reference the sections listed below.

1. Parcel Code Number and Property Address.

This box defines the property being accessed. As well as a postal address, each property is allocated a parcel code. You can see the codes — as well as lot lines and dimensions — for the WoodCreek subdivision by zooming in on the City's map reproduced here .

2. Taxable Value Calculation.

The taxes due for any property are based on the lower of two amounts, the Capped Taxable Value (CTV) and the State Equalized Value (SEV).

If you have paid taxes for this property last year, then you are given a new Taxable Value for the next year, the amount being calculated by multiplying the Prior Year Amount by the Inflation Rate Multiplier, which is based on the Consumer Price Index (CPI). In this example, the Prior Year Amount was $130,900 and the Inflation Rate Multiplier was 1.016 (1.6%). Multiplying the two together and rounding down to the nearest $10 gives the Current Amount of $132,990. Note that the Inflation Rate Multiplier is capped at 1.05 (5%), so even if the inflation rate rises above that figure, your Taxable Value would not increase by more than the 5% cap.

If you moved into the house in the last year, then any taxes you paid were based on the Current Amount paid by the previous owner. However, for this first full year, your taxes will be based on the State Equalized Value. The City's assessor determines the Assessed Value based on a formula and the price of other recently sold homes that are comparable to yours. Once the value of the property is determined, it is divided in half and that number becomes the SEV. If the State does not agree that the City's assessor used the correct procedures, it could impose an Equalization Factor to increase or decrease the City's Assessed Value as appropriate. In practice, in Farmington Hills at least, this never happens so that the Equalization Factor is always "1" and the Assessed Value and SEV are always equal.

In a declining housing market, depending on how long a particular property has been grandfathered into the system, it is possible for the SEV to fall below the CTV, and when this happens, the Taxable Value for that year will be based on the SEV rather than the CTV. The following year, the property then becomes recapped at the new Taxable Value, which was last year's SEV multiplied by the Inflation Rate Multiplier.

Remember that, even if your taxes are not based on the SEV, it is nevertheless a useful number, because doubling it gives an initial estimate of your property's value. Property value assessments are generally made on building square footage, so if you think that the property under consideration is more or less well maintained than average, the value expectation should be adjusted accordingly. Also, a in low density subdivision like WoodCreek, actually house prices may be expected to be higher than the average for a similar sized dwelling elsewhere in the City.

3.  Appealling Your Taxable Value

This box gives the exact date range for protesting your taxes, which is always the second week of March.

What your neighbors with similar properties pay in property taxes will be influenced by both how long they have owned the home and paying taxes based on the CTV. However, if you wish to compare your taxes to those of your neighbors you can visit the City's On-Line Property Inquiry site. Note that in the Search by Address box, less is often more. Typing in "Well", for example, provides you with all the data for Wellington Rd., the number of records you see per page being limited by the value in the pull-down box on the top-right, labeled "Records Per Page". Once a particular property is selected, information about it is displayed in 3 tabs: Property, Tax and Special Assessment.

Another tool for comparing the value of your house for tax purposes is the City's Residential Sales Study.

The Tax Statement — How Much is Actually Paid

statement780This document shows an example of a Summer Statement for the year and property discussed above. Tap or click the image to see an enlarged version. Note that the box titled P.R.E. Tax (Principle Resident Exemption) includes the Taxable Value of the property, in this case $132,990. Using this, the tax payable for various purposes is listed under the columns: 
      ¦  Tax Description  ¦   Rate per $1,000  ¦  Amount  ¦
The row listing Library Operations is easiest to use as an example because it has a "Rate per $1,000" (also called a millage) of exactly $1. This home owners pays summer taxes for Library Operations to the amount of $1 x 132,990 (the Taxable Value) ÷ 1,000 = $132.99. When all the millages are added, the summer taxes add up to the amount shown in the TOTAL box at the bottom of the page.

Some tax millages are collected in summer and a smaller number are collected in winter or split between the two periods. This means that two tax statements/demands are sent out each year. At present, the summer tax amounts to about 80% of the total annual tax.

Late payments incur an initial penalty followed by further increments for each month in arrears. Senior citizens, with a household income less than $40,000 and who have difficulty paying the greater summer tax bill, can file an application for deferment of payment. Be aware that little is private as regards your property taxes. What you pay, if you pay and when you pay can all be seen by anyone visiting the On-Line Property Inquiry site.

Millages

From time to time, a millage will find its way onto a ballot paper in an effort to raise extra money for a certain purpose. These have included the Detroit Zoo, the Detroit Institute of Art, the City Library, Farmington Schools and roads, among others. Expressed as a millage, a proposal may not seem to amount to very much. A $2 millage, however, when applied to the property cited on this page, would cost the home owner an extra $265.98 per year additional property tax. An easy way to calculate the affect on actual taxes of a millage is, for every $1 of the millage, replace the comma separator in the Taxable Value by a decimal point. Again using the example property used here, a $1 millage on a Taxable Value of $132,990 amounts to $132.99 per year in additional taxes (exchanging the comma for a decimal point). Similarly, a $1.45 millage would add, for this property, an additional $132.99 x 1.45 = $192.84 per year to the taxes.