Question about non-homestead taxes

Asked by Julie, Royal Oak, MI Mon Jul 21, 2008

I'm interested in buying a house that currently has taxes that are non-homestead (so they're really high!). My question is, do I have to pay that tax rate until my taxes are reassessed next year, or can I have that tax rate adjusted sooner.

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Chris Ervin, Agent, Madison Heights, MI
Mon Jul 21, 2008
Unless your Realtor builds it into the purchase agreement, your prorations will be based on the rate as currently billed. However, If you have escrows set up (your taxes and insurance are included in your payment), your lender may base the escrows on the homesteaded rate. In some cases, the payment would be significantly affected. If you feel that even the homestead rate is too high, you may go before the "tax tribunal" which allows homeowners to dispute their taxable values. You would need to check with the municipality for the appropriate date. If you are asking for concessions and the seller waives the prorations, please consult your lender as some will deduct the portion of taxes waived from the total concessions.
Chris Ervin
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Julie, Home Buyer, Royal Oak, MI
Mon Jul 21, 2008
Thank you for your advice! I didn't realize you had to pay that rate until the next year, so working with the seller to pay a portion is a good idea. It is not a foreclosure, it was a rental property that is now for sale. Thanks again!
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LYNN Afton, Agent, Big Rapids, MI
Mon Jul 21, 2008
Hi Julie-
When you submit your offer, you can request in your purchase agreement that the seller pay all taxes billed in the current calendar year. Your lender is still going to create a reserve to pay your taxes based on the non-homestead amount.
If this home is a foreclosure or REO, pay close attention to the addendums that you will be required to sign, as they can negate any terms in the purchase agreement that you submit- including how the taxes will be pro-rated!
Click on the link to visit my blog for questions & answers on property taxes in Michigan, and some suggestions for faster relief in the taxes withheld by your lender in your mortgage payments.
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Derek Bauer, Agent, South Lyon, MI
Mon Jul 21, 2008

Shirley is correct, on both accounts. A good, creative Agent has options available as relates to drafting the offer to help offset those taxes for you for the next year until they are reassessed...

Best of luck.

Derek Bauer, Associate Broker / Realtor
Real Estate One - Farmington Hills / West Bloomfield
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Shirley Coro…, Agent, Clarkston, MI
Mon Jul 21, 2008
Hi Julie,

Unfortunately, you will have to wait until next year. Assessments (and reassessments) are done once a year in the spring. At the closing for purchase of the property you will be given a form by which you claim your homestead tax status. You will file the form at the township in which the house is located. That will trigger the homestead tax rate at the next assessment period.

There are a number of ways your offer can be written, however, to try and defray the higher cost of the taxes. Your agent should be able to help you out when writing the offer.

Best of luck to you! Purchasing a home is an exciting adventure.

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