The Dexter Leader
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Assessors determine a property's taxable value
By Crystal Hayduk, Special Writer
PUBLISHED: May 15, 2008
Every property is assessed on an annual basis to determine its taxable value. The assessment is based on three concepts, said Greg Zamenski, president of Advanced Assessment Technologies.
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The first is the value of the land if it were vacant. This number is determined by sales within a designated time frame. Land can be valued by the acre, front foot, or square foot.
The second concept is depreciated construction cost. For example, if a home was built in 2008, it would be valued at 100 percent because no depreciation has occurred yet. The state provides an assessor's manual to guide the assessor in determining the value. Depreciation is changed based on the age of a building and whether improvements have been made.
The third concept is called the "Economic Condition Factor," in which the market value of the dwelling is taken into consideration. Location is an important factor.
The three concepts together make up the assessed value, also known as the state equalized value. The market value, or the amount of money one could plausibly sell a house for, is generally two times the SEV.Although a property is assessed every year, it's only inspected if the assessor happens to notice a major change in the property; if the property changes ownership; or if there is new construction to the property, such as an addition or remodeling.
Inspection involves the assessor determining the value of a home by various methods such as exterior measurements, observed depreciation, and evaluation of the neighborhood. With a homeowner's permission, the assessor may also check the interior of a home.
"The SEV goes down, but your taxes go up. So what's the story on that?" asked Barb Allen.
Zamenski explained the seeming discrepancy.
"Taxable value is either the same as the assessed value, the 5 percent cap higher than the previous year's taxable value, or the previous year's value multiplied by the rate of inflation, whichever is lowest. Assessed value is tied to the market. In good times, assessments can increase due to strong sales.
"Since 1994, assessments in this area could have risen 150 percent or more. The taxable value only rises at the inflation rate, which has never been higher than 5 percent (protected by law) and has hovered around 2 to 3 percent a year since 1994," Zamenski said.
Doing the math, he used the example of a home in 1994 that was worth $100,000 with both an SEV and taxable value of $50,000. In 2008, that same house is now worth $198,000 with a SEV of $99,000, but a taxable value of only $70,500. To lower the taxable value, the SEV would have to fall below $70,500.
If the same home were to change ownership in 2008 with a sale price of $198,000, its value "uncaps." The home would be re-assessed and the values would be re-calculated so that the taxable value and the SEV would be equal at $99,000.
For more information on a home's assessment, call the local assessor or the County Equalization Department.
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