Estimating Property Taxes For New Property Owners
Many changes were made to Michigan’s property tax system by Proposal “A” approved in 1994 by Michigan’s voters.

One of these changes was to add protections to protect the current property owners from large increases in their property tax base from one year to the next. The increase in taxable value is limited each year to the lesser of 5%, or the inflation rate, unless physical improvements are made, or unless a transfer of ownership took place in the previous year.

The inflation rate has ranged between 1.5% and 3.7% a year since the passage of Proposal “A” But when a transfer of ownership takes place, such as a sale of the property, the taxable value on the property becomes “uncapped” in the year following the sale. This means that the taxable value shall be revised without limitations, to match the property’s assessed value. Michigan law requires that assessments be at 50% of the property’s true cash (market) value.

Purchasers of property that wish to estimate their future property tax bills should look beyond the tax amounts currently being paid by the existing property owner. In many cases, taxable value increases have been limited to the inflation rate for a number of years while actual property value has been increasing at a much faster rate. In the year following a transfer of ownership, such as a sale of property, the taxable value is “uncapped” and could result in a significantly different tax bill than those paid by the previous owners.

The Assessing Department is happy to assist new purchasers on property tax estimates. Please give us a call if you have any questions.