When you move to Michigan you are going to encounter a very confusing property tax system. I know realtors that are confused on how Michigan property taxes work. So you are not alone. You may be worried about what your taxes will be on your home when you purchase it. First of all any good realtor will be able to figure it out. So some of the following information may be confusing but remember you can ask your realtor or call the city treasurer. If you call the city treasurer and give them the property address you can find out what the Michigan property taxes will be after you buy the home.
Let's talk about the most important part about Michigan property taxes. You will see home listings that will either say homestead or non homestead taxes. We you buy a home and live in it as your principal residence you get a reduced rate of property taxes. You get the homestead rate. So you will have "homesteaded" Michigan property taxes. You can only have one homestead. If you are married you can only claim one home. Your wife cannot claim one and you claim another. So if you own a vacation home or an investment property you cannot claim homestead on it. Only your main residence that you live in can be your homesteaded property. If you live in another state and claim that home as your prinicipal residence then you cannot claim the homestead here in Michigan. With the computer programs they will catch you. They verify it against driver's licenses, what you put on your taxes as your main residence and other information. So if you try to cheat they most likely are going to catch you. The bad part is that they will disallow prior years and add penalties and interest to it. So it can cost you alot more.
The difference between and homestead taxes and non homestead taxes is about 30%. So if you buy a investment property or second home you are going to be paying about 30% more than somebody that would be living in the property. When you close on a home in Michigan you will get a piece of paper that you have to file at the city to claim your home as homesteaded. It is very important to file this paper. If you do not next year your taxes are going up 30%. The title company will put this paper on top of the closing package when they hand it to you after you close. So be sure to file the homestead exemption paperwork at the city your new home is in.
The second confusing part of Michigan property taxes is how they are collected. They are split up into two bills. The winter tax bill that comes out on December 1st of each year and the summer tax bill that comes out on July 1st of each year. Many Michigan relocation buyers believe that you are paying taxes for 6 months at a time. That is incorrect. The summer tax bill runs from July 1st of this year to June 30th of next year. The winter tax bill runs from December 1st of this year to November 30th of next year. They run a full year. To add more confusion to the process is every city does their winter/summer taxes differently. Our Michigan property tax bills cover
The winter and summer taxes used to be split pretty evenly for cost. But now some cities collect most of the money in the summer and a little in the winter. For example some cities you may pay $2457 in the summer and 1340 in the winter. Other cities may collect $3557 in the summer and only collect $240 in the winter. It is a crazy system I admit. The bottom line is just add the winter and summer tax bills up for your total. Remember if you want to know what your future tax bill will be call the communities treasurers department to get an accurate figure. They will do it right over the phone for you. So now we have covered homesteaded taxes and non-homesteaded taxes, winter taxes, and summer taxes. So if you do not like them how do you fight them?
When you want to dispute the amount you want to pay in taxes you first have to go to the local tax board. Most cities do them once a year in early Febuary though some are now doing them twice a year. The first thing you have to remember is that it does not matter what your neighbor or somebody else is paying down the street. Each home is assessed individually based on what the city knows about your home. That is why some people do not take out building permits. They do not want their taxes to go up if the city knows they have a deck or a finished basement. You tax assessment is based on when you bought the house. So somebody that lives down the street and has lived there longer than you most likely will have a lower tax bill than you. That is how our system works.
What you have to prove when fighting your Michigan property taxes is that your home is not worth what the city has assessed it at. The city assessor looks at recent sold homes and applies their formula to come up with the State Equalized Value (SEV). In order to prove that your property taxes should be lower you have to find sold comparables in the time that your city specifies. They must be of similar style homes and close to your home. Remember it does not matter what other people are paying. It boils down to what the recent sales prices of other homes like yours in the area. It has to be in the time period the city uses. The tax review board will make a decision based on the information you provide and that they have. If you do not like that decision then you can take it to the next level up to the State.
I hope this page has given you the information you need to understand our Michigan property taxes a little better. I know it is confusing. If you are moving to Michigan and need a good realtor give me a call on my cell (248) 310-6239. I will be glad to help you find your next home. Remember we offer a great buyers bonus too!
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