A bill to amend 1893 PA 206, entitled “The general property tax act,” by amending section 27 (MCL 211.27), as amended by 2022 PA 240.
The bill aims to refine the definition and assessment of "true cash value" for property tax purposes, emphasizing the usual selling price at private sales rather than auction or forced sales, with certain exceptions. It mandates assessors to consider various factors such as location, soil quality, zoning, and economic income from structures and land when determining true cash value. Notably, the bill stipulates that normal repairs, replacements, and maintenance should not increase the true cash value of residential properties until they are sold, listing specific activities like painting, siding replacement, and installing alternative energy systems as examples of such maintenance.
The bill also introduces procedural changes for assessors, requiring the exclusion of certain amounts from real estate sales data used for assessments, such as financing costs, personal property included in the sale, and surveying costs. It allows purchasers to file affidavits to identify these amounts, which assessors must then forward to county equalization departments. Additionally, the bill addresses the assessment of agricultural property, requiring assessors to verify the correct classification and exclude certain sales from studies if affidavits are not filed.
For nonprofit housing properties transferred to low-income individuals, the bill sets the purchase price or loan amount as the presumptive true cash value, with subsequent adjustments as per section 27a. It defines key terms like "charitable nonprofit housing organization" and "low-income person" to ensure clarity in these transactions.
The bill also clarifies that the net book value of standard tools, as determined by generally accepted accounting principles, should be used for tax statements, rather than their federal income tax value. Furthermore, it restricts the use of comparable sales data in assessments if the properties in question are subject to private restrictions or covenants that limit their use.
Overall, House Bill No. 5865 seeks to provide a more accurate and fair assessment of property values for tax purposes, ensuring that normal maintenance does not unfairly increase tax burdens and that specific exclusions and procedural requirements are met to maintain consistency and fairness in property tax assessments.
Co-sponsored by Reps.
Referred to the Committee on Tax Policy
