Property Taxes To watch out for?

Question

Looking at a mixed use office building in the older part of a nice, more affluent downtown area, I'm curious to know what one may be looking at in terms of an increase in property taxes. As I understand, property taxes only go up a max of 5% annually , until the building is sold or renovated significantly, at which the cap is removed. New at this, so how can one reasonably estimate? I know I may be missing key information here but:

B-3 tenant retail/office building 7,000SF. Class C, built in 1883 and renovated in 2004. Listed at 1.4M and then dropped to 1.2M.

Total assessment: $212,000. Current taxes around $10K annually.

How drastically could these go up?

Thanks All

B-3 tenant retail/office building 7,000SF. Class C, built in 1883 and renovated in 2004. Listed at 1.4M and then dropped to 1.2M.

Total assessment: $212,000. Current taxes around $10K annually.

How drastically could these go up?

Thanks All

Drew Sygit · Answer

@Ethan Kohler you can get an idea of what the taxes will change to after you purchase by looking at the current SEV, looking up the applicable millage rates and multiplying them.

The only unknown is if the assessor will just use 50% of your purchase price as the new SEV/Taxable Value.

FYI - Michigan Taxable Values can only go up the LESSER of 5% or the state's COLA (Cost Of Living Allowance).

Ronald Rohde · Answer

This sounds a lot more nuanced and better for someone local (investor, attorney) in your county.

Ethan Kohler · Answer

Thanks Connor. In Michigan, assessed value is set at 50% of market value. So I believe, the assessed value would go up to about 600K from 212K. Given that the current 10k in annual taxes equates to about a 5% tax rate, I would think annual taxes would jump to 30k annually. But maybe I'm missing some other variables.

Conner Olsen · Answer

Totally depends on your county, each one is different. To be conservative underwriter that the assessed value goes up to market value

Property Taxes To watch out for?

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