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Property Taxes and Buying a Home in Michigan

Posted by Cindy Knight on Saturday, May 12th, 2018 at 12:16am.

In this world, nothing is certain except death and taxes, yet so many buyers miss the tax part when looking for a home.

Michigan Property taxes

Unless you're paying cash for your home, property taxes are important because they've figured into your mortgage payment and qualifying ratios. This is one reason why so many agents require a mortgage pre-approval before showing you homes. This way your agent knows what amount the lender is using for taxes, so they can adjust the sales price of homes you're looking at up or down, depending on that amount.  

For instance, $4800 for taxes or $400 a month is a whole lot different than $2400 or $200 a month. 

Another equally important item is the Millage Rate and believe it or not one of Rooms Realty's most visited pages. Unfortunately, many buyers aren't aware of how millage rates or a little thing called uncapping works until they move in and their property taxes adjust. Too many times we see buyers assume that the taxes on the MLS printout will be the taxes they'll pay, but that's wrong. You can prevent huge jumps in taxes by checking the millage rate up front and running basic calculations. This is one reason why our team prefers to sit with buyers up front so they can cover items like property taxes.

To give you an example, we recently had a buyer looking at a few condos in the same complex with varying taxes. Although the units were similar, one unit was $2210 and the other $4260. The difference was one unit sold in 1993 and the other in 2006. You can bet the state equalized value or SEV will uncap on the unit sold in 1993 once the sale occurs raising the taxes closer to the other units.  To make matters worse if you rent the property or use it as a second home the taxes will increase even more. 

Your agent and lender can't tell you exactly what your taxes will be, but it's best to err on the higher side when making your purchase and calculate high. The state doesn't allow cities and townships to track your sales price, but it is an assessors job to know the value of homes in their area and adjust SEV's accordingly. 

Do you have a topic you would like to see on our blog? If so, comment below.

Cindy


 

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