Grand Rapids, Michigan is the second largest city in the state and the seventh fastest growing metropolis in the United States. Aside from its rich history, beautiful scenery, and diverse population, this city has experienced increased growth in population over the last decade because of so several factors, including low cost of living, high employment growth, and excellent schools and neighborhoods.
It is no wonder that a lot of people are moving to Grand Rapids. The River City has so much to offer – the beautiful landscape and gardens, hand-crafted breweries, 5-star restaurants, luxury apartment complexes, and a downtown area with a huge range of entertainment, shopping, and sightseeing. If you are looking to buy a house in this city, this article provides helpful information about the typical costs of homes in the area and property taxes.
Assessed Values and Taxable Values in Michigan
In Michigan, the assessed value of a property is equivalent to 50% of its market value. Local assessors determine how much a property could sell for on the market, considering factors such as its size, features, and the prices of recently sold properties then multiply this amount by 0.5 to arrive at the assessed value.
If you buy a new home in Michigan, the taxable value is equal to the assessed value. However, the taxable value from the succeeding years will no longer be equal to the assessed value. In fact, your property’s taxable value would often be lower than its assessed value because the Michigan State Constitution sets a limit to the increase of taxable value to 5% or the level of inflation, whichever is lower.
Essentially, homeowners in Michigan are protected by the state constitution from significant increases in their property taxes. Since the taxable value of a property in Michigan is limited to 5%, its property tax will remain relatively steady even when home values are surging upwards.
Real Property Tax Rates in Michigan
In Michigan, tax rates apply to your property’s taxable value. Tax rates are expressed as mill rates, with one mill equal to $1 of tax for every $1,000 of taxable value. For example, if your total tax rate is 20 mills and your taxable value is $50,000, your taxes owed would be $1,000 annually ($20 multiplied by 50). The state government levies a statewide tax of six mills and local government tax authorities, such as city governments and school districts, set additional rates. Given the complexity of Michigan’s property tax rules, it is best to look at effective tax rates when comparing property tax rates. An effective tax rate is the annual amount paid as a percentage of the home value.
Property Taxes in Grand Rapids, MI
If you are looking to buy a home in Grand Rapids, MI, you will find that properties here are relatively budget friendly. The typical home value in Grand Rapids is $201,705, much lower than the nation’s average of $262,604 (as of October 2020).
Grand Rapids is located within Kent County, whose property tax rates are lower than most of the state’s urban counties. Kent County’s average effective tax rate is 1.55%. At this rate, a homeowner whose home is worth $150,000, for example, would pay $2,325 annually in property taxes.
The Assessor’s Office administers the property tax laws of the state of Michigan, prepares the assessment roll for all non-exempt properties in the city, and mails the notice of assessed value for properties in January of every year. It is also the city assessor that determines the true cash value (TCV) of taxable properties. The assessed value of properties is 50% of the TCV.
Principal Residence Exemption (PRE) for Grand Rapids, MI Homeowners
Homeowners living in their principal residence in Michigan are eligible for the Principal Residence Exemption (PRE), also referred to as “homestead exemption”. PRE is an exemption from the local school operating millage. In Grand Rapids, the exemption is up to 18 mills. If you own and occupy your home as your primary residence, then you are eligible to claim the Principal Residence Exemption.
The Principal Residence Exemption (PRE) Affidavit is typically presented to homebuyers at closing. If you did not get this form, you will need to file this affidavit. Note that you are allowed to claim only one Principal Residence Exemption in the state of Michigan and cannot claim a similar exemption in another state at the same time.
The percentage of your PRE, your PRE status, can range from 0% or 100%, depending on your residence. For example, if you own a duplex and occupy only one side of the property, you could have 50% PRE. If you are unsure of your PRE status, you may check your most recent Property Tax Statement, go online, or call the Assessor’s Office at 311 or (616) 456-3000.
If you own your home and your PRE status is 0%, you should file a PRE Affidavit. The deadline for filing this form is on or before June 1st of the year you want the exemption to be applied. In case your request has been denied on a city or state level, you can file for an appeal. If the Michigan Department of Treasury sent you the denial letter, you have to appeal in writing to the Department of Treasury within 35 days of the date on the denial letter. If you received the Notice of Denial from the city, you should file a petition with the Michigan Tax Tribunal within 35 days of the date on the Notice of Denial.
If you are looking to buy a home in Grand Rapids, Michigan, you will be glad to know that this city not only has a relatively lower median home sale price compared to the rest of the state, it also has lower annual property taxes. If you want to explore your home options in this wonderful city, feel free to give us a call at 616-483-0572 or send us an email at [email protected] to schedule a meeting.