I, Both Buyer and Seller in Shelby Township, MI

what is the best way to estimate taxes for a purchase in GPS? I know the previous owner paid about $3500/yr

Asked by I, Shelby Township, MI Thu Sep 18, 2008

Help the community by answering this question:


In Michigan, it is illegal for taxable amount to follow the sale price on a particular property.

Buyers should go into a home purchase with their eyes open on the property taxes they will be paying. You will not pay taxes on half of the sales price. If you are purchasing a home with a Principal Residence Expemption on it currently, you will pay less tax at the beginning of your mortgage than if the home does not currently have a PRE. You should ask this question, as your taxes will be almost double if it does not.

If the home does not currently have a Principal Residence Exemption (Homestead Exemption), your taxes will be estimated by your mortgage company at the current non-exempt rate for the rest of this year, and also your estimated escrow amounts at closing, for taxes if you are paying them along with your mortgage payment.

Since PRE exemption must be filed by May 1st of any year, when you sign the document at closing for your PRE exemption, it will be in effect for next year, not this year. You must inform your mortgage company in January to change your tax escrow amount, and have the taxing authority (city or twp) contact them with the correct estimated 2009 amounts. They will not do this automatically.

When you purchase a home, the property value that is taxed on becomes "uncapped". The new amount that is taxed on should revert to the SEV, or State Equalized Value, which is half the current assessed market value, according to the localities assessor. The current SEV is the figure that you want to ask for.

Because... The "taxable value" is the amount the current owner is taxed on, not what you will be taxed on when it becomes uncapped. At the point of the sale, the taxable value will be raised to the same amount as the SEV.

Your new taxable value will then increase (or possibly decrease) by a state factor each year, which is similar to a rate of inflation. That is why taxable values that are being taxed on are often way lower than a property's SEV, because the property value has risen for years, and the taxable value has only increased by the inflation rate.

See my blog for other answers regarding Michigan Property Taxes: http://activerain.com/blogsview/601855/Questions-on-Property-Taxes
1 vote Thank Flag Link Thu Sep 18, 2008
Call the assessor or treasurer office for the applicable municipality and ask what the taxable value is for 2008. Then, ask for the applicable millage rate (whether it will be a homesteaded property for you, or not). Do that math and you will know for the upcoming year.

If the taxable value is less then 50% of the purchase price, your taxes could go up in 2009, but that will give you a good estimate for the next 12 months or so.
Web Reference: http://www.DoorToDreams.com
1 vote Thank Flag Link Thu Sep 18, 2008
you can go to mi.gov and do a propery tax estimator or follow this link http://www.michigan.gov/som/0,1607,7-192-29929_39918-82403--…
1 vote Thank Flag Link Thu Sep 18, 2008
True in that it's not up to date (the state estimator site) but it's close enough to estimate, per the question above.

While it is true that the Homestead Exemption date is May 1st for homestead v. non-homestead, the state did revise its rules for vacant homes being kept as homestead during the sales process.

Also, each city has a different time that it calculates it's SEV revisions. Canton, for example, does it in March per the assessor when I called to ask last week.

One more note -- If you're curious as to what amount to repay for your pro-rations due at closing...you can get creative if you're tight on cash due at closing.

If you're unable to use concessions, or are maxed out with them and still have remaining due...try this:
1. Ask the seller to credit you some pro-rations
2. If it's non-homestead, use the calculator to calculate based on homesteaded rates and ask the seller/bank to base on this, as you shouldn't necessarily be penalized the higher rates because they chose or were forced to leave.

Just a thought ;)
0 votes Thank Flag Link Thu Feb 26, 2009
The Michigan site, Michigan.gov/departmentoftreasure/propertytaxestimator is not up to date with it's millages. Local REALTORS have a quick link access to that via our MiRealSource MLS site. However it is still showing miliage rates for 2007. For your purposes: find the current (2008) SEV and the current millage rates ( homestead and/or non-homestead. Divide the SEV by 100 and multiply that number by the current millage rate. Like most other cities, our SEVs have been dropping, like 12 - 15% last year. So, depending on when a house was last sold, NOT what the current owner paid, those property taxes just might drop from what shows on the MLS listing. See?
0 votes Thank Flag Link Wed Feb 25, 2009
I suggest using the property tax estimator link given by Geoffrey. Make sure you enter the correct school district. It will give you an estimate for homestead and non homestead taxes. If the property is a foreclosure or short sale, the estimator results may not give you a correct value. Also keep in mind, the city is not trying to loose their tax base with the downturn in home values. This website also contains some information
http://www.grossepointeshores.org/html/taxroll.html# I'm not sure how accurate.

When in doubt, contact the city assessors office as suggested by Derek. To the best of my knowledge, property taxes have been issued for all properties. A lender usually will use these values and there may/may not be an adjustment next spring. The City assessors office should be able to explain this further.
Web Reference: http://mi-living.com
0 votes Thank Flag Link Thu Sep 18, 2008
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