Property Tax Overview:
Property tax is a levy on property. It is required to be paid by the owner annually based on the fiscal year. They are collected on a county level and each county has its own system in determining them.
Because each county has its own system, property taxes vary from county to county. Property tax on homes are based on a tax assessments and millage rates for the local municipality. Counties take many variables into consideration as well: funding needs, property value based in appraisal, school district, transportation, etc.
Because there are a variety of variables considered during the process property taxes are not set, they fluctuate. Local governments can raise property taxes for a number of reason (this is often seen when the economy starts to take a turn for the worst). Property taxes are set by millage rates that are typically voted on in local elections to cover such things as fire departments, libraries and police departments.
How to calculate Michigan Property Taxes
Calculating Michigan property taxes is an important step when you are buying a new home. If your estimates are off, you could find your budget thousands of dollars off each year. The easiest way to do the math is to use the Michigan Property Tax Estimator.
You will then complete the following steps:
- Enter the SEV (State Equalized Value) found on the property tax records (you will use the SEV to calculate the property taxes for a property that you are purchasing. To calculate the property taxes for the current owner you will use the “Taxable Value” which may be less than the SEV.
- Select your Michigan County
- Select Your City/Village/Township
- Select Your School District
After entering this information you will see two numbers below. One number will be the estimated property tax bill based on a Primary Residence and the other number will be the number based on a non homestead exempt property such as an investment property.
How you affect your property taxes:
Homeowner’s actions often increase their property taxes. As a home’s value increases so do its property taxes. For example, if homeowners remodel, re-roof, add a pool or do anything else that would add value to their home, their property taxes may be effected. The local municipal assessor will revisit the property and make value adjustments accordingly.
Michigan Property Tax:
In Michigan, the median home value is $132,200 according to Tax-Rates.org. Counties collect an average of 1.62 percent of their property’s market value as property taxes; that’s an average of $2,145 each year spent on property taxes – equivalent to 3.8% of most Michigander’s annual income ($55,244)!
Now, as stated above, these statistics are averages of Michigan as a whole. They do vary, a significant amount! The highest property tax in Michigan is that of Washtenaw County which is at 2.9 percent. The lowest is in Luce County at .56 percent.
As you can see, location matters for many reasons when choosing a home.
So, when you are shopping around take all expenses into consideration so you are able to make the best and most affordable decision for you and your family.