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In the mid 90's the voters in Michigan passed property tax reform called Proposal A. The
proposal was a plebiscite (direct democracy)
intended to reduce and limit property taxes,
increase the sales tax, create a real estate transfer tax, and equalize pupil funding for public education. The new property tax system has saved every
association member significant dollars but has some confusing elements. The system initially reduced every property tax bill between 30% and 50% but created a tiered approach that taxes second homeowners at 18 mills (50% higher than homesteads). The growth of your tax bill is limited under Proposal A to 5% or the rate of inflation. This is a good arrangement for everyone. Confusion comes to some when they receive their assessment and see the assessed value growth and the taxable value growth. Your assessed value can exceed 5% (it's based on 50% of market value) and is a shadow determiner that will trigger if your property changes hands. It is your taxable value and tax bill that should not grow faster than the inflation rate or 5% -unless the voters agree to a tax increase.
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