Michigan SEV Calculations

[Matthew Orton]

I have an opportunity to buy a student housing property that was sold a few years ago for $8M, at a reduced price of ~$5M due to Covid and a few other issues. The property has an SEV close to 50% of the original $8M purchase price at ~$4M and property taxes are currently ~$320k per year. 

I’m not completely familiar with how things work in Michigan so I’m wondering whether, after sale, the SEV will decrease to reflect a max SEV of $2M (50% of $4M sale price) equating to ~$160k per year in property tax?

Thank you,

Matt

[Charles Kao]

@Matthew Orton Taxable value can uncap to SEV regardless of price so even if you bought property below SEV that does not man it will go down. I would call the city to find out and look for examples of similarly zoned recent sales from year before to see what city does. Some cities always rise to purchase price.