Real Estate

The Ultimate Guide to Michigan Property Tax

By Tom Burchnell
michigan property tax

What do you know about your Michigan property tax, other than the fact that you have to pay it every year? It’s an inevitable part of life for all American homeowners, regardless of state, and yet many people don’t know how it’s calculated or exactly where that money goes.

Your property tax depends on two factors:

  1. The value of your home
  2. The property tax rate calculated by your city or town

Every municipality in the United States has the freedom to calculate residents’ property tax rates based on how much the local government needs to provide services. Property taxes fund things like public schools, police and fire departments, trash removal, and winter road care.

Some of your property taxes also go to your state government. In most states, property tax is a small percentage of the state’s revenue. Michigan, however, is one of only five states in which property tax contributes five percent or more of state government income.

What Is the Average Property Tax in Michigan?

How much is property tax in Michigan? The average Michigan homeowner pays $4,108 per year in property taxes, about 1.64 percent of their property’s assessed value. That’s more than 1.5 times the national average, calculated as $2,700 or just over one percent of assessed property value.

However, because the Michigan property tax rate is calculated at the municipal and county levels, there’s a fair amount of variance even within state borders.

Where Are the Highest and Lowest Property Taxes in Michigan?

In Michigan’s Wayne County, residents pay an effective tax rate of about 2.69 percent, the 31st highest rate of any county in the United States. That’s partly because Wayne County includes Detroit, which has the most expensive property tax of any US city.

Its runner-ups are:

  • Ingham County at 2.28 percent
  • Genessee County at 1.98 percent
  • Calhoun County at 1.92 percent.

On the other end of the scale, Michigan has several counties where property taxes are approximately 1 percent or less of a home’s value:

  • 0.91 percent in Leelanau County
  • 0.94 percent in Benzie County
  • 1.07 percent in Luce and Mackinac Counties

These are the rates that Michigan municipalities use to calculate real property taxes. Because taxes also depend on home value, you won’t necessarily pay in the lowest bracket if you live in a county with a low property tax rate.

Take a look at the lowest median Michigan real estate taxes:

  • $860 in Luce County
  • $870 in Oscoda County
  • $1,000 per year in Ontonagon County

The highest median payments are more than three times as high as the lowest:

  • $3,905 in Washtenaw County
  • $3,314 in Oakland County
  • $2,710 in Ingham County

Note that there’s only one match between the lowest Michigan property tax rate and the lowest median tax payments, and only one match in the highest-tax categories. You do have some control over how much you’ll pay for property tax in Michigan. However, you do have to buy a modest home in a low-rate area to benefit.

What Drives up the Michigan Property Tax Rate?

Michigan’s dependence on property tax is part of why residents pay high property taxes, but it’s not the only reason. Another contributing factor is the Principal Residence Exemption, or PRE.

The PRE means that if you own a home that you live in as your primary residence, you can submit an affidavit that exempts you from school taxes up to 18 mills. (One mill is equal to $1 per $1,000 of taxable value.)

The PRE means that investment properties pay much more in real property tax than primary residences. It also affects the amount of funding that schools get from homeowners, depending on the percentage of rentals in an area. As a result, PRE rates may affect the amount that municipalities have to charge.

How Can You Calculate Your Michigan Real Estate Taxes?

Michigan’s treasury department offers an easy online tool to help you calculate your property tax. You’ll need:

  • The name of your county, AND
  • The property’s taxable value (if you currently own the property in question) OR
  • The State Equalized Value (SEV), defined as half of the property’s assessed value

You can also use a third-party calculation tool or work it out manually. The process of manual calculation is complex in Michigan, so if you choose to go this route, you’ll probably want to consult with an accountant or real estate attorney.

When Are Property Taxes Due in Michigan?

Michigan charges two property taxes: a winter and a summer tax. Each covers the full year and accounts for part of your total property tax payment. You’ll get a separate bill for each.

  • Winter property taxes: Billed on December 1st, due before February 15 of the following calendar year
  • Summer property taxes: Billed on July 1st, due before September 15th of the same year

If you pay after the deadline, you’ll be charged a penalty based on how late your payment is.

If the due date for summer or winter taxes falls on a weekend or holiday, as in February of 2020, property taxes for that period are due on the prior business day.

What if You Can’t Pay Your Michigan Property Tax?

Property tax is mandatory in Michigan if you are a homeowner. The only way to get out of paying is to sell your home, and that usually means moving. At least, that’s what most people assume.

A sale-leaseback solution allows you to sell your home and remain in place as a tenant. The sale-leaseback company you sell to gets the deed to your home and takes on all related responsibilities, including property tax, and you pay rent to the company as a tenant.

It’s a win-win situation—no more worrying about Michigan property taxes and no need to move out of the home you love.

Key Takeaways

Paying your Michigan property tax can feel like a chain around your ankles, stressing you out and forcing you to choose between your home and your finances. If this is the case, talk to a financial consultant about your options.

Property Tax
Real Estate
Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

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