Quit Claim Deed & Michigan Property Taxes

[Eric La Pratt]

Hi all,

My wife is the sole legal owner of a duplex in Ferndale, MI (48220) that we consider "ours" (it was purchased on her own after we got married because it didn't need 2 people to qualify for) and we are considering a cash-out refi to pull equity out without losing the property. If you are aware of property taxes in Ferndale, they are not cheap: $4400 annually for something with a taxable value of $57k and SEV of 77k. I understand that there is a law in Michigan that prevents the powers that be (Oakland county?) from raising the taxable value more than a few percent annually, regardless of the actual value of the property. Furthermore, I understand that taxes typically change when there has been a change in the title or sale of the property and they usually "reset" to the value that the property was sold at (given that is typically fair market value).

The cash out refi we are considering will require that I be added to mortgage and that my name is also added to the property in a quit claim deed. My big question is this: Will this change my taxable value? It's not a sale, per se, but a refinance that does shift the title. It's also not just a refinance as I would then take an ownership interest in the property. Lastly, my wife's maiden name is on the current title. She only changed her name late last year and never got around to updating the title/tax info. So it might appear as if the title changed from 1 person to 2 with a different last name.

The concern is if my property has doubled in value and we follow this through to fruition, will the taxable and SEV then reset to the new mortgage amount (or something else much higher than it currently is) because the fair market value has increased? If the taxable value of the property doubled, then the taxes would double. Triple value = triple the amount taxes. As you can imagine, going from 4400 to 8800 or 13200 would be a financial wreck for any property in the Ferndale market.

Thanks for any help on this!