Frequently Asked Questions about Property Values & Taxes

How are property taxes determined? 

The State of Michigan requires that all real and personal properties be assessed annually. The State of Michigan also sets, requires, and enforces the math formula that is used to calculate property taxes in Michigan. 

Because the State can’t assess every real and personal property in Michigan, it requires local governments—like the City of Dearborn—to help with this process by assessing some properties within the cities that they serve. 

The City of Dearborn is responsible for determining and inputting the assessed value of a home or business property into the math formula created and required by the State of Michigan to set property taxes. 

Property taxes use the property’s taxable value multiplied by the local millage rates. Local millages are fees the voters vote upon to pay for state, county, and local services. 

How can I lower my taxes? 

In 1994, Michigan voters approved the constitutional amendment called Proposal A. Proposal A established Taxable Value as the basis for calculating property taxes.  Increases in Taxable Value are limited to the percent of change in the rate of inflation (CPI) or 5%, whichever is less, as long as there were no losses or additions to the property.  

The limit on Taxable Value does not apply to a property in the year following a transfer of ownership (sale).  

 

 The equation for property taxes is a simple math formula:

      Property Taxes=Taxable Value (TV)/1,000 x Your Millage Rate

We cannot change the millage rate, but if you have a difference of opinion about the valuation of your property, the assessed value can be disputed every year through the March Board of Review. 

If you own and occupy a residential property, filing a Principal Residence Exemption Affidavit will reduce your tax bill amount.

Why did my assessed value change? 

Your assessed value is equal to one-half of the market value of the property in question. The assessor must uncap your taxable value if the property was purchased/transferred last year. This means that your taxable value becomes the same as your assessed value. 

This will typically result in an increase in your taxes. If you did not purchase the property last year, did you add or remove anything of value? If so, this could be why the value of the home or residence increases or decreases. If none of the above is applicable, it was likely the annual CPI adjustment mandated by the State of Michigan. Based on inflation set by the state, this adjustment is applied to the taxable value of all properties in the state at the current CPI or 5%, whichever rate is less.

 

There are two primary reasons for the increase in value. If a property was purchased last year, the taxable value now equals the assessed value, which is always 50% of market value. In addition, taxable values receive an inflation rate increase every year, which is limited to 5%. 

I just purchased/sold a home, what do I do now? 

Both the buyer and seller of a property must turn in paperwork to the assessor's office.  

If the seller claimed the property as their Principal Residence, the seller is responsible for filing a Request to Rescind Principal Residence Exemption (Form 2602), the effective date should be the closing date.

A Property Transfer Affidavit (Form L-4260 or 2766) must be filed whenever real estate or some types of personal property are transferred (even if you are not recording a deed). This completed affidavit must be filed by the new owner within 45 days of the date of transfer, per state law. Failure to file this affidavit within 45 days will result in penalties of $5 per day/up to a maximum of $200 for residential property and $20 per day/up to a maximum of $1,000 for commercial or industrial property.

If the buyer qualifies and would like to apply to have their new home listed as the Principal Residence, a Principal Residence Exemption (Form 2368) must be filled out and submitted to the assessor’s office for review. 

The buyer must also fill out and submit a Name and Address Change form, available in our office or on the city’s website.

A Property Transfer Affidavit (Form L-4260 or 2766) must be filed even if you are not recording a deed. If you plan to occupy the property as your only residence, filing a Principal Residence Exemption Affidavit is recommended. 

How do I apply for an exemption (poverty, principal residence, disabled veterans, non-profit, abatements)?

State law (MCL 211.7u) provides for a property tax exemption for the principal residence of persons who cannot contribute to the public charges by reason of poverty. In order to receive a poverty exemption at 50% of value, a Dearborn homeowner must annually file a completed application form with all required additional documentation. Information regarding eligibility, household income guidelines, and filing requirements can be found online or can be obtained from the Assessor’s Office during normal business hours.

A Poverty Exemption Application Form can be obtained through the Assessor’s Office in person or on the city’s website. It must be completed and turned in to the Assessment Department before December. The exemption application lists the requirements for submission. 

Principal Residence Exemption -  A Principal Residence Exemption (PRE) exempts a residence from the tax levied by the local school district for school operating purposes, up to 18 mills. To qualify for a principal residence exemption on a dwelling, state law requires that the property be (1) owned by a qualified owner as defined by state law (2) be occupied as a principal residence by that owner of the property, (3) none of the disqualifying factors listed in MCL 211.7cc(3) apply.  

Please note that PRE is a separate program from the Homestead Property Tax Credit, which is filed annually with your Michigan Individual Income Tax Return.

Disabled Veterans Exemption (MCL 211.7b) provides an exemption from property taxes under the General Property Tax Act for a disabled veteran who was honorably discharged from the United States Armed Forces or for the un-remarried surviving spouse of that disabled veteran.  

To obtain the exemption, the property owner or his or her legal designee shall file an affidavit (form 5107) showing the facts with the assessing office after Jan. 1 and before Dec. 31 for each year that the exemption is requested. Postmark of Dec. 30 will be accepted.

Please note that proof from the VA must be presented to receive.

Where can I find assessment information on Dearborn properties? 

Information for Dearborn Properties can be found on BS&A Online. The information is also available at the Assessor’s Office during normal business hours.