How do I estimate Property Tax?

Question

I'm buying a few investment properties in Detroit. How do I estimate what property taxes will be?

Scott M. · Answer

What @Joe Lijoi is pointing you to is where you go to see if you have any back taxes owing on a parcel in Wayne County.  Nothing to do with estimating current or future taxes.  As a realtor/broker for 20 years I simply use the MLS to find the state equalized value of the proprety, that is really what you need to find.  As I have had access to that for 20 years I really do not know how a non-realtor find that info but if you are working with a realtor ask them to provide for you the state equalized value.  If you are not working with anyone send me a message and I am happy to help you on estimating the taxes.  Takes but a minute.

If you do find the state equalized let everyone here know where you found it so everyone can learn. Once you have the SEV you need to multiply that by the tax millage rate. That can be found here:

Taxes - Millage Rates (michigan.gov)

You need to find the city and school discritc that your home is in and then find either the homestead (if you live as your primary home) or non homestead (far right column and if it isn't your primary home) and then move the decimal place over so you have .0 So, for example the non homestead for detroit is 87.6202. You would instead use .0876202 Then you need to add any other fees, for example 240 for a single family home in Detroit. And ~25 for admin fees. Lets do an example:

20,000 Example SEV for a Detroit home with Detroit schools.  You need to use the proper SEV for your homex.0876202   Tax millage rate for non owner occupied (investment)

= $1,752.40

+ 240 +25

= $2,017.40

For me, I would round that up to 2,100 as an estimate for you spreadsheet, better to be a little high then a little low.

The only catch is you have to find the SEV and I haven't looked for that in 2 decades as I have access through the MLS. Again, if you or anyone is having trouble or wants me to find the SEV for them, just let me know, happy to help.

Drew Sygit · Answer

@Daniel Carty Michigan has some of the most complicated property taxes in the US.

First, Michigan uses the State Equalized Value (SEV) to determine INITIAL Taxable Value. The SEV is supposed to be 50% of the market value. Many people mistakenly believe the SEV is 50% of the purchase price, but it is supposed to be the market value.

Most cities have an Assessor that determines how much values have changed each year. Since they can't do each property individually, they use comparables to make broad generalizations to determine percent changes. Then these are applied to all properties in that city. Property owners get an annual update with their winter property tax bill.

Most Michigan properties receive TWO annual tax bills - one from the city and one from the county. Many banks handling tax escrow accounts for mortgages have mistakenly thought there was one tax due twice/year or totally missed one of the taxes.

Okay, so once you have your SEV, you then have to research your Taxable Value. Back in 1994(?) Michigan passed the Headlee Amendment (http://www.legislature.mi.gov/(S(k5m2va1uyfgwtbyjf4nqb1bx))/mileg.aspx?page=LoadVirtualDoc&BookmarkID=6536) that capped increases to the SEV annually to the lower of 5% or the state's Cost of Living increase. This was done to protect senior citizens on fixed incomes from being forced to sell their homes due to unaffordable property tax increases.

So now, the city assessor tracks the SEV, but homeowners are taxed based upon the Taxable Value. These two numbers diverge over time as market values increase, but tax increases are capped. The Taxable Value is uncapped and equated to the SEV upon a sale or other transfer of property ownership, with limited exceptions.

Once you know the Taxable Value, you can look up the property tax millage rates, which each city & county sets separately (with voter approval).

So, yes, it is very possible for property taxes to jump from $907 to $3200 if the seller has owned the property for quite some time.

You can use this tool to estimate your future taxes after they are uncapped: https://www.michigan.gov/taxes/0,4676,7-238-43535_43540---,00.html

Rob Pollock · Answer

I use the following website run by the state it appears to be accurate. You do have to guess what your SEV will be which as described above is not always 50% of what you paid.

https://treas-secure.state.mi....

Joe Lijoi · Answer

https://pta.waynecounty.com/

Joe Lijoi · Answer

Hi,

If you have the parcel numbers, you can use the tax assessors website. Or you can call and they can give you the tax info as well.

Daniel Carty · Answer

You deserved it! What a great answer.

Drew Sygit · Answer

@Daniel Carty

Thanks for the vote:)

Nadir M. · Answer

@Daniel Carty

Agent should help. Visit the county tax assessors site.

Daniel Carty · Answer

Thanks! I know the parcel number. Do you know what the tax assessors website is for Detroit? I was googling but I couldn't find where to put in the parcel number.

How do I estimate Property Tax?

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