How Do Michigan Property Taxes Work?
Michigan law requires properties to be assessed at 50% of their market value (or “true cash value”). This assessment is done annually by local assessors based on factors like size, features, and sales of comparable properties.
Counties, cities, school districts, and other taxing authorities each levy their own millage. One mill equals $1 of tax for every $1,000 of a property’s taxable value. In addition, the state imposes a State Education Tax (SET) of 6 mills on all real property, which helps fund K-12 public schools.
According to the latest data from Intuit Turbotax, Michigan’s statewide average effective property tax rate is about 1.62%, which is higher than the national average of around 0.9%. This puts Michigan in the top 10 states with the highest property tax rates. On a typical single-family primary residence with an assessed value of $132,000, your annual property tax might cost around $2,138.
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Rates Vary Within the State
Your tax bill can vary widely depending on where you buy a home. For example, homeowners in cities like Frankfort (in the small county of Benzie) pay an average effective property rate of around 0.84%, which is less than the national average.
Uncapping of Taxable Value
If you’re buying a home, keep in mind that property taxes can change after the sale. That’s because Michigan law allows a property’s taxable value to “uncap” and reset to the current assessed value once it changes ownership, which can lead to a noticeable tax increase for new buyers compared to what the previous owner paid.
Note: HomeLight’s Michigan property tax calculator provides rough estimates using average effective tax rates for primary residences. Your actual bill will vary based on your home’s location, eligible exemptions, and other factors. You can view a complete list of pre-exemption millage rates at this link on Michigan.gov. For the most accurate information, contact your local assessor’s office.
Are There Property Tax Exemptions in Michigan?
Michigan offers several property tax exemptions and relief programs that can reduce the amount you owe, particularly for primary homes and eligible individuals. These include:
- Principal Residence Exemption (PRE): This provision exempts your home from up to 18 mills of local school operating taxes if it’s your primary residence. The PRE is a separate program from the Homestead Property Tax Credit, which can be filed annually with your Michigan Individual Income Tax Return.
- Poverty Exemption: Homeowners with low income and limited assets may qualify for a poverty exemption that partially or fully waives property taxes, depending on local guidelines.
- Disabled Veterans Exemption: Michigan offers exemptions for real property owned and used as a homestead by a disabled veteran or the disabled veteran’s unremarried, surviving spouse.
To claim these and other Michigan property tax exemptions, you’ll typically need to file paperwork with your local assessor by a set deadline. If you’re purchasing a home, be sure to confirm whether the seller’s exemptions will still apply once the home transfers to you.
How is assessed value different from market value?
Assessed value and market value may sound similar, but they serve different purposes in Michigan real estate:
- Market value is what a buyer would likely pay for a home in the current market. This is what your agent uses to price your home and what you’d pay when buying.
- Assessed value in Michigan is determined by the local assessor and is supposed to represent 50% of the property’s market value. However, the taxable value — the number actually used to calculate your property tax bill — is usually lower and grows slowly due to Michigan’s property tax laws.
Michigan law caps the growth of taxable value to the rate of inflation or 5%, whichever is lower, unless the property changes hands. Because of the state’s uncapping rules, new buyers should not base their tax estimate on what the previous owner paid.
When are Michigan Property Taxes Due?
In most Michigan communities, property taxes are typically billed twice a year:
- Summer taxes: Payable from July 1 through August 31 without penalty
- Winter taxes: Payable from December 1 through February 14 without penalty
Exact due dates and penalties for late payments vary by locality, so be sure to check with your city or county treasurer. If you’re buying a home, your lender may collect estimated taxes through escrow and pay them on your behalf.
What Do Property Taxes Pay For in Michigan?
Property taxes help fund essential public services in your local area. This includes:
- K–12 public schools (including the State Education Tax)
- Police and fire departments
- Roads, maintenance, and snow removal
- Local libraries, parks, and other municipal services
Each taxing authority — like your county, city, school district, or township — receives a portion of your tax bill based on millage rates.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
What Does It Cost to Buy a Home in Michigan?
How much home can you afford?
Affordability depends on your income, interest rates, and home price. Using the median Michigan household income (~$69,000), you might qualify for a mortgage on a roughly $205,000 home if you follow the common rule of spending no more than 30% of your gross income on housing costs. Your actual affordability will vary based on your credit, debt-to-income ratio, and interest rates. Use HomeLight’s Home Affordability Calculator for a more personalized estimate.
What down payment will you need?
Down payments typically range from 3% for certain loan types to 20% for conventional mortgages. In Michigan’s current market, buyers often put down 10%–20%. For example, on a $260,000 home, a 10% down payment equals $26,000. Use HomeLight’s Down Payment Calculator to model different scenarios based on your budget and loan options.
How much are closing costs in Michigan?
Buyers in Michigan usually pay between 2%–4% of the home’s purchase price in closing costs.
- For a median-priced $260,000 home, closing costs could fall between $5,200 and $10,400
- On the lower end, for a $200,000 home, closing costs may be approximately $4,000–$8,000
These costs include lender fees, title insurance, taxes, and prepaid items. Talk to your lender and agent for a precise estimate using the lender’s Loan Estimate.
How to find a trusted Michigan real estate agent
Buying a home is easier with a local expert who knows your neighborhood, area negotiation dynamics, and tax nuances. HomeLight can connect you to the best agents in your Michigan market. Our free Agent Match platform analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs
If you’re ready to find an agent in the Wolverine State who can help you from start to close, get started today by telling us a little about your plans. There’s no obligation and no cost to consult with a top-performing expert.
Here are some helpful resources to assist you when searching for a trusted buyer’s agent:
- How to pick a buyer’s agent
- Why hire a buyer’s agent
- How much are Realtor fees?
- Questions to ask a buyer’s agent
If you’re buying and selling a home at the same time, check out HomeLight’s innovative Buy Before You Sell program. This modern buying solution unlocks the equity in your current home to streamline and simplify the entire process. You can make a stronger, non-contingent offer on your new home in Michigan and only move once. Watch the short video below to learn more.