TO: Real Estate Agents June 5, 2007

Title Companies

Financial Institutions

FROM: City of Marquette Assessing Office

Susan K. Tillison, CMAE III Assessor

Ellen Britton, Level I Assessor

The Assessing Office, within the Community Development Department of the City of Marquette, has been receiving numerous phone calls from purchasers of property. These purchasers have not been made aware of the laws within the State of Michigan regarding the ‘UNCAPPING’ of properties due to a ‘TRANSFER OF OWNERSHIP’.

By state statute, the local unit assessor must uncap the property when a transfer occurs. Upon the sale of property, the property becomes ‘UNCAPPED’, which means the year after the property is sold, ownership is transferred and the taxable value is increased to what the assessed value is for the year following the sale. This may result in a significant increase in taxes when compared to the payment made by the prior owner. Due to this law, new property owners have reflected potential financial strain. They also have stated that they were only made aware of the taxes being paid at the time of purchase, and not of the potential increase. In most cases if the current assessed value was used to base the future tax calculation, new property owners would be aware of their tax liability. This information would greatly reduce the frustration we are hearing from the new property owner.

In the attached example there is a sale in 2007 which constitutes a ‘TRANSFER OF OWNERSHIP’ in 2008. The 2007 assessed value is $55,800, while the 2007 taxable value is $34,078. The 2008 taxable value will increase to what the 2008 assessed value is, which is considerably higher than what the previous property owner was paying taxes on. The difference between the 2007 and prospective 2008 taxable value is $21,722. You can see by this example why it is necessary for purchasers to be aware of the property transfer regulations within the State of Michigan.

It would be greatly appreciated if you would assist in informing your clients of the uncapping requirements and the potential increase in taxable value. Also, please suggest the client call their local unit assessing office with any questions they may have regarding this issue. Additionally, if you have any questions regarding this issue, please do not hesitate to contact the assessing office and speak with either Ellen Britton or Susan Tillison. They may be contacted between the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday at 906-228-0425.

EXAMPLE: