Guide · 2026
In Michigan, the year after you buy a home its taxable value resets to the state equalized value, which is about half of market value, and your tax bill is figured from that new number. After that one reset, taxable value can rise each year only by inflation or 5 percent, whichever is less. For 2026 that limit is 2.7 percent.
This guide explains the three numbers on an assessment notice, why the seller's tax bill is a poor guide to yours, and how to estimate your own bill before you make an offer. Last reviewed October 15, 2026.
| Number | What it means |
|---|---|
| Assessed value / State equalized value (SEV) | Half of the assessor's estimate of market value. |
| Capped value | Last year's taxable value minus any losses, times the inflation rate or 1.05 (whichever is lower), plus additions such as new construction. |
| Taxable value | The lower of the SEV and the capped value. This is the number your taxes are figured from. |
A mill is $1 of tax for every $1,000 of taxable value. Your tax bill is your taxable value divided by 1,000, times the total millage where the property sits.
A long-time owner's taxable value has been held down by the cap for years, so it can sit far below the SEV. When the property sells, the cap is removed for one year and taxable value jumps to the SEV. Michigan law sets this reset for the calendar year after the transfer, and the assessor does not have discretion to skip it.
Hypothetical example. A home sells for $500,000. The seller's taxable value is $150,000. The assessor's SEV for the next year is $250,000, half of an estimated $500,000 market value. Using an illustrative total rate of 60 mills (actual rates vary by city and school district):
| Taxable value | Tax at 60 mills | |
|---|---|---|
| Seller, last year | $150,000 | $9,000 |
| Buyer, year after purchase | $250,000 | $15,000 |
| Buyer, the year after that, at the 2026 multiplier of 1.027 | $256,750 | $15,405 |
The SEV is based on the assessor's estimate of market value, which may be different from the price you paid.
If the home is your principal residence, you can claim the Principal Residence Exemption, which exempts the property from up to 18 mills of local school operating tax. You file Form 2368 with the assessor of the city or township where the property sits. An affidavit filed by June 1 lowers that year's taxes starting with the summer bill. One filed from June 2 through November 1 starts with the winter bill. The assessor may grant it retroactively for the current year and up to three prior years if you qualified in each of those years.
A second home, a rental or an investment property does not qualify, so it pays the higher non-homestead rate. For a multi-unit building you live in, only the portion you live in can be exempt.
The reset applies to the calendar year after the transfer. The first bills you receive after closing are usually still based on the seller's taxable value. The higher number shows up in the following year's bills. Ask the title company how taxes are prorated at closing, and do not use the closing proration as an estimate of your future taxes.
Additions. New construction and other additions are added to taxable value on top of the cap.
Land contracts. Signing a land contract counts as a transfer of ownership, even though the deed has not been delivered yet.
Entities. A change in ownership of the company or trust that holds title can count as a transfer, even when the deed itself does not change.
Transfers that do not reset taxable value include a transfer between spouses or to a surviving spouse, and a transfer of residential property to certain close relatives listed in the law, as long as the property is not used for any commercial purpose afterward. The assessor may ask for proof.
House Bill 5872 of 2026 would end the reset for transfers starting in 2027. It passed the Michigan House 57 to 46 on May 20, 2026, and was referred to the Senate Committee on Government Operations on June 2, 2026. It has not passed the Senate. A related constitutional amendment, House Joint Resolution T, was introduced on April 22, 2026, and has not had a vote. Until a change is enacted, the reset described above is the law.
1. Find the parcel's current SEV on the city or township assessing website, or ask the listing agent for the most recent assessment notice.
2. Find the total millage for that city and school district, homestead or non-homestead. Treasury's Property Tax Estimator lists them.
3. Multiply the SEV by the total millage and divide by 1,000. That is a first-year estimate. Then confirm it with the assessor or a tax advisor.
This guide is general information, not tax or legal advice. Rules and rates change; confirm the numbers for a specific property with the local assessor.
Nicholas Asplund, Associate Broker, Lux Partners Global. (810) 222-9019 · nick@luxpartnersglobal.com