Doesn’t it seem odd when we say the real estate value is falling and the property taxes are decreasing? At this time should not the property tax be decreasing to increase purchase of real estates and let the real estate market come in equilibrium with demand? .But unfortunately my friends that is not the case.
Property taxes are calculated on consumer price index rather than state equalized value which may fluctuate according to market conditions.
State Equalized Values or SEV is equal to 50 percent of the market value of ones property. So even if the market value of properties is high or low the property tax can be higher.
When a person buys a property, the purchase price, exact half of it becomes the new State Equalized Values.
To the relief of property owners in 1994, Michigan voters approved a constitutional amendment known as Proposal A. Proposal A stated that to limit the increase in property taxes to either 5% or the annual change in the Consumer Price Index (CPI), whichever is less, until ownership of the property is transferred.
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