Why do property taxes go up when you buy a house in Michigan?

I've had buyers fall in love with a house, look at the taxes on the listing, and plan their budget around that number. Then the first full tax bill shows up and it's double. Nobody did anything wrong. That's just how Michigan works, and it's worth understanding before you write an offer.

The short version of Proposal A

Every Michigan home has two values the assessor tracks:

• State equalized value (SEV). Roughly half of what the assessor thinks the home is worth.
• Taxable value. What your taxes are actually calculated on.

While you own the home, taxable value can only go up by inflation or 5%, whichever is less. For 2026 that's 2.7%. Home values have climbed a lot faster than that over the years, so for someone who's owned a while, the taxable value can sit far below the SEV.

What happens when the home sells

A sale is a "transfer of ownership," and it uncaps the property. The year after the transfer, taxable value is set equal to the SEV. Then it gets capped again going forward, for you this time.

Here's a simple example. The seller has owned since 2005. Their taxable value is $110,000, but the SEV is $185,000. You buy in 2026. Starting with the 2027 bills, your taxable value jumps to about $185,000. Same house, same millage, around 68% more tax.

The exemption you have to file for

If the home will be your principal residence, file the Principal Residence Exemption affidavit (Form 2368) with your city or township assessor. It exempts your home from up to 18 mills of school operating taxes, which is real money. The deadlines are June 1 and November 1. Many title companies hand you the form at closing, but it's your job to make sure it gets filed. The Michigan Department of Treasury has the details.

You also need to file a Property Transfer Affidavit within 45 days of closing. Miss it and there's a penalty of $5 a day, up to $200. Again, title usually helps, but double check.

How to estimate your real tax bill

1. Look up the home's current SEV. Most cities and townships have it on their assessing website, or ask your agent.
2. Find the local millage rate for a principal residence (some sites list it as "homestead" or "PRE").
3. Multiply the SEV by the millage rate and divide by 1,000. That's a ballpark annual tax after uncapping.

The SEV for the following year might also go up, so give yourself a little cushion. If you want a hand with this on a specific house, I'm happy to run it with you. That's a five minute phone call that can save you a bad surprise.

The City of Northville's 2026 guide to Proposal A is one of the clearer explanations I've seen if you want more detail.

Does this matter for sellers?

A little. Savvy buyers will look at the uncapped number, and it can affect what they're comfortable paying, especially in higher millage areas. It's one of the reasons homes in different cities with similar prices can have very different monthly payments. If you're curious where your home sits, our instant home value is a good place to start.