What is the difference between "Full Cash Value" and "Assessed Value"?

The distinction between Full Cash Value and Assessed Value is fundamental in property tax assessment. Full Cash Value represents the property’s estimated market value, which is the price it would likely sell for in an open market transaction between a willing buyer and seller. This valuation is intended to reflect what John Q. Public would consider the true worth of the property under normal circumstances.

Assessed Value, on the other hand, is commonly a percentage of the Full Cash Value, often set at 50% in Michigan for the purposes of taxation. This means that while property owners may expect their property to be worth a certain amount based on market conditions, for taxation, the government assesses that property at half of that market value. This system allows the state to determine how much tax each property owner must pay, ensuring a workflow that aligns with standard taxation principles while also keeping property taxes manageable for homeowners.

Therefore, the relationship described in this answer accurately reflects the practice of property valuation in Michigan, where assessed values are assessed at a fraction of the full cash or market value, facilitating clearer and more equitable taxation.