Reassessment Effect Seen in Dearborn Residential Values

DEARBORN, MI – The value of residential property rose 6.7 percent in Dearborn from 2015 to 2016 as the city completed a detailed, multi-year reassessment of properties.

However, city officials said residents will see only a negligible increase in property taxes due to the reassessment.

The 6.7 percent increase in assessed value is a signal that home prices are rising in Dearborn, which indicates buyers are interested in living and investing in the city, officials said.

Property assessments of individual homes in 2016 likely climbed more or less than the overall increase of 6.7 percent.

In some cases, individual homeowners may see that their assessed values have declined. Annual notices of assessed property values will be mailed in late February.

While stronger property values are good news, the effect on property taxes is a little more complicated.

There is a difference in market value, assessed value and taxable value of homes. Assessed value is 50 percent of the market value ( likely selling price) of a home. Because the State of Michigan has required the city to conduct a complete reappraisal, homeowners will see that their assessed value rose or fell this year. However, the taxable value, which is used to calculate property taxes will, only increase by three tenths of one percent (0.3%).

Taxable value can only increase at the inflation rate or 5 percent, whichever is lower.

For example, a house now worth $100,000 sees a 2016 assessment value increase from $40,000 to $50,000. But the taxable value of the home would only rise to $40,120 this year. This would result in a total increase of a principal residence of $7.37.

In some cases, homeowners in Dearborn may see an increase in their taxable value, even if their assessed value fell in 2016. This would occur only if the taxable value is still below the assessed value. But, again, the taxable value increase cannot exceed 0.3 percent in 2016.

It is important to note that the “capped” taxable value does not apply to houses that are sold in the previous year. Taxable value resets to the current assessed value whenever a property is sold. This will then be “capped” in subsequent years.

A structural addition can also cause the taxable value to rise more than the capped inflation limit. However, state law prohibits an assessor from increasing a property value for normal repairs and maintenance.

In anticipation of the current state mandate, Dearborn began the city-wide property reappraisal process in 2011. Detailed aerial and street view photographs were compared to reappraisal information from the last city-wide reappraisal in 1981.

n 2013, a comprehensive data review began to assure that the information used to re-appraise properties is as accurate as possible. Fairness in the assessment process can only be obtained by means of utilizing accurate data.

Finally, new property values were calculated in late 2015, based upon recent property sales information.These values will serve as the new assessed values for the 2016 year.