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Except for additions and losses to a property, annual increases in the property’s taxable value are limited to 5% or the inflation rate, whichever is less for continuous owners. In the year following a statutory transfer of ownership, that limitation is eliminated and the property’s taxable value is set at 50% of the property’s true cash value (i.e., the state-equalized value). This is what is meant by “taxable value uncapping”. See Michigan Compiled Laws (MCL) 211.27a(3).
Note: A property’s true cash value is usually not the same as its sale price for a variety of reasons. An assessor must determine the true cash value of a property that has sold in the same manner that the assessor determines the true cash values of properties that have not sold. Therefore, an assessor may not automatically set an assessed value or a taxable value at half of a property’s selling price. See State Tax Commission Bulletin No. 19 of 1997 and State Tax Commission Memorandum dated October 25, 2005, that describes the illegal and unconstitutional practice of “following sales.”
In the calendar year after you purchase your property, your taxes will no longer be based on the previous owner’s capped taxable value. The taxable value in your second calendar year of ownership will only increase by the rate of inflation or 5%, whichever is less unless additions or losses to the property occur because it is now capped.
Your taxable value may now be different than your neighbors. Their taxable value may have been capped many years before yours, so it would have no correlation with the current market and is not comparable. The Assessed Value is the factor to be used when comparing properties for current value in the market.