SEV going up just as the market does, Taxable Value capped at inflated rate.
SEV going down, Taxable Value still increasing per inflation rate.
House Sold in Year 9.
Taxable Value goes down because it cannot be higher than the SEV.
In summary, for many years homeowners have benefited from Proposal A. It has capped or limited the value used to calculate annual taxes to a level that is more sustainable. Proposal A does not work as well in a declining market because property taxes are driven by the taxable value, which increases annually by the rate of inflation, determined annually by the State of Michigan. As a result, taxable value often lags behind the state equalized value and can increase even though there may be a decrease in the state equalized value.