Property Taxes

Property Taxes

Understanding property taxes in Michigan can be confusing, especially for new homeowners. At City Living Detroit, we want you to have the right tools and information to feel confident as you navigate this important part of owning a home.

Key Things to Know

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1. Estimating Property Taxes

Michigan has a unique property tax system that makes it difficult to predict exactly what your future taxes will be. Real estate agents are not permitted to provide official estimates. Instead, we recommend using the State of Michigan Property Tax Estimator to get a general idea.

Here’s how it works:

  • Enter the State Equalized Value (SEV) for the property, which can be found on the MLS sheet, public record data, or in the municipality where the home is located.

  • Select the county where the property is located.

  • Enter the school district.

  • Review the estimated taxes for both Homestead (primary residence) and Non-Homestead (investment or secondary home) properties.

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2. What Happens After a Sale: The Reset

 When a home is sold in Michigan, the property taxes don’t stay the same as what the seller paid. After closing, the local assessor will reassess the property to reflect its current market value. The taxable value is then “reset” and becomes uncapped, matching the property’s current State Equalized Value (SEV).

This reset often results in a higher tax bill for the new owner than what the seller was paying. It’s important to keep this in mind when budgeting, as the seller’s past tax history is not a reliable indicator of your future tax obligations.

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3. After the Reset: Annual Increases

Once the taxable value has been reset, Michigan law limits how much it can increase each year. Going forward, it may rise by the rate of inflation or 5%—whichever is lower—until the property is sold again. At the next sale, the process repeats with a new reassessment and reset.

 

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4. When Property Taxes Are Due

 In most Michigan communities, property taxes are paid in advance:

  • The summer tax bill is usually paid to the city.

  • The winter tax bill is usually paid to the county.

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5. Getting More Details

 For the most accurate information, contact the assessor’s office in the community where you are planning to purchase. They can provide details on future tax assessments and values.

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6. Property Tax Abatements (NEZ)

The Neighborhood Enterprise Zone (NEZ) is a property tax abatement program designed to encourage investment in residential housing in designated areas. Below are key resources and eligibility rules you’ll want to know if you own or plan to purchase a home in Detroit.

What you should know:

  • NEZ Homestead – Applies to existing homes in an NEZ district that you purchase and occupy as your primary residence. Provides a reduced property tax rate for up to 15 years.

  • NEZ Rehab – For homes that require substantial improvements in a designated NEZ district. You must invest a minimum amount in repairs/renovations, and once approved, you receive the same tax abatement benefit as Homestead.

  • NEZ New Construction – For newly built homes or condo developments in an NEZ district. Offers a reduced tax rate for up to 15 years, encouraging new residential construction within the city.

To see if your property is eligible, or to apply:

If you’re considering a property in Detroit, we can help you determine if it falls within an NEZ district or development.

Disclaimer

This page is intended as a general resource. Property tax laws, assessments, and abatements can change, and details may vary by municipality.
All information should be verified directly with the municipality in which you are considering purchasing a home.

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