Michigan Property Taxes Explained: A Complete Guide for Homeowners
Buying a home in Michigan comes with a lot of excitement—but also some important financial considerations. One of the biggest factors many new homeowners overlook is property taxes. Understanding how Michigan property taxes work can help you budget accurately and avoid any surprises. Here’s everything you need to know.
How Michigan Property Taxes Are Calculated
Michigan property taxes are based on the taxable value of your property, not necessarily the market value. Here’s how it works:
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State Equalized Value (SEV): Usually 50% of your home’s market value, as determined by your local assessor.
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Taxable Value: Typically equal to the SEV, but may be lower if your property qualifies for exemptions or the capped value law applies.
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Millage Rate: Expressed in “mills,” with 1 mill equaling $1 of tax per $1,000 of taxable value. Your city, county, school district, and other authorities all contribute to the total millage rate.
Example:
If your home’s taxable value is $200,000 and your local millage rate is 35 mills (0.035), your annual property tax would be:
$200,000×0.035=$7,000
Understanding the “Capped Value” Law
Michigan has a property tax limitation law to prevent steep increases for existing homeowners:
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Your taxable value can increase no more than 5% or the rate of inflation, whichever is lower, until the home is sold.
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When the home is sold, the taxable value resets to the current SEV.
This helps long-term homeowners enjoy predictable property taxes.
Michigan Property Tax Exemptions and Reductions
Several exemptions can reduce your property taxes:
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Principal Residence Exemption (PRE): Most homeowners qualify for this to lower taxable value on their primary residence.
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Homestead Exemption: Ensures your main home is taxed at a lower rate than rental or commercial properties.
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Veteran Exemptions: Full or partial exemptions for qualified veterans and disabled veterans.
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Other Local Exemptions: Some cities and townships offer reductions for seniors, low-income homeowners, or historic properties.
When Property Taxes Are Due
Property taxes in Michigan are typically due twice a year:
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Summer Bill: Due July 1, covering July 1–December 31.
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Winter Bill: Due December 1, covering January 1–June 30.
Many homeowners include property taxes in their monthly mortgage payments, with the lender paying the tax directly.
How Property Taxes Affect Your Mortgage
Property taxes are a key part of your total housing costs. Lenders consider them when calculating your Debt-to-Income (DTI) ratio and monthly mortgage payment. Always ask your loan officer (that’s us!) for a property tax estimate so your mortgage fits your budget.
Can I Appeal My Property Tax Assessment?
If you believe your home is over-assessed, you can appeal your assessed value with your local Board of Review. Appeals are worthwhile if your assessed value is significantly higher than comparable homes in your area.
At JPAL Mortgage, we don’t just guide you through the mortgage process—we also work directly with a professional property tax expert. This specialist carefully analyzes your property’s assessed value and can help identify opportunities to appeal your property taxes when appropriate. Having this level of expertise on your side ensures you’re not overpaying and can take full advantage of available exemptions, giving you both peace of mind and potential savings.
Claim your FREE appraisal reimbursement from JPAL!
Simply fill out this form and when you finance a home with us, we’ll reimburse the cost of your appraisal (up to $600) at closing.** We’ll respond within 30 minutes of filling out the form.
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**All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. Appraisal reimbursement available for loans closed with JPAL Mortgage LLC and applied at closing. NMLS ID #2189752 | Equal Housing Opportunity.
FAQ: Michigan Property Taxes
Q1: How are Michigan property taxes calculated?
Michigan property taxes are based on your home’s taxable value, usually the lesser of the State Equalized Value (50% of market value) or the capped value. The taxable value is multiplied by your local millage rate to determine your annual property tax.
Q2: What is the capped value law?
The capped value law limits yearly taxable value increases to 5% or the rate of inflation, whichever is lower, for long-term homeowners. The cap resets when the home is sold.
Q3: Are there exemptions to reduce property taxes in Michigan?
Yes! Key exemptions include the Principal Residence Exemption (PRE), veteran exemptions, and local programs for seniors, low-income homeowners, or historic properties.
Q4: When are Michigan property taxes due?
Taxes are typically due twice a year: the summer bill (July 1) and the winter bill (December 1). Many homeowners pay through their mortgage lender.
Q5: Can I appeal my property tax assessment?
Yes. You can appeal with your local Board of Review if your home is over-assessed compared to similar homes in your area. It’s best to work with a property tax expert – we can connect you to the right one!
Q6: How do property taxes affect my mortgage?
Lenders consider property taxes when calculating your monthly payment and Debt-to-Income ratio, which affects mortgage eligibility.
Key Takeaways
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Michigan property taxes are based on taxable value, not market value.
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The capped value law protects long-term homeowners from large increases.
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Multiple exemptions are available for primary residents, veterans, seniors, and more.
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Property taxes significantly affect your monthly mortgage payment, so plan carefully.