If the ourchase price is 150k and enter that as the sev and complete the remaining info it says annual property taxes are almost 12,000. Does that seem correct?
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y
In all honesty you are trying to foresee the future and the way that SE MI calculates taxes is not that straight forward. Look at sales of homes in the area you are looking at for the past year and then look at what happened to the SEV in the year after the sale. Did they raise to be equal to or close to half the sales prices? In most cases you will find no. Instead you generally find that areas are raised/lowered together in bulk based on the assessors whims. Not saying on occasion you would find a standout but for the most part predicting future SEV is impossible. Only way to really guess is in a growing or shrinking market to look at what has been happening in years past. Meaning, if the whole area goes up 10% it is likely most SEV's will go up ~the same %. Based on previous years increases, decreases you can go used your magic 8 ball from there.
Personally I think that property tax estimator is garbage. And they use 2019 data when you can get 2020 data here:
and the 2021 Summer taxes are now out as well so for those cities you can look up the 2021 data to get you closer.
As others have said, I am a broker and if you are looking at a home give me a message and I am happy to run you through the math to get to an estimate of taxes. Takes a few minutes and is not big deal, happy to help out.
Rental Property Investor · Lake Orion, MI · Member since 2017 · 35 posts · 12 votes
5y
@Joe Donlevy what city are you looking in? I live in Lake Orion and invest in Pontiac. Regardless, $12,000 seems ridiculously high for a $150,000 purchase.
Charlotte, NC · Member since 2020 · 9 posts · 2 votes
5y
@Michael McIntosh Thanks. I am looking in Ferndale. I thought it seems insane too. The MI tax assessor website says I have to enter the SEV. I am putting in the pirchase price in that field and completing the rest of the data. Wasnt sure if there was someone who could tell me the correct input.
Rental Property Investor · Lake Orion, MI · Member since 2017 · 35 posts · 12 votes
5y
@Joe Donlevy while I'm no expert, I think the SEV is typically half the actual value of the house. I'm also a huge fan of being conservative with numbers. I'd probably estimate taxes around $6,000 then and contact a local realtor to verify.
I always suggest Jeff Todd with Keller Williams. I'm guessing you probably have someone though since you're out of state. Best of luck!!
Charlotte, NC · Member since 2020 · 9 posts · 2 votes
5y
Thanks @Arsen Atanasovski. I actually don’t have a specific property. Before I started looking I wanted to know how the reassessments work. I beleive @Michael McIntosh is correct that SEV is half the sales price. Then i go to the Michigan tax estimator site and the amount is close to 6k on a 150k hypothetical purchase in Ferndale.
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y
In all honesty you are trying to foresee the future and the way that SE MI calculates taxes is not that straight forward. Look at sales of homes in the area you are looking at for the past year and then look at what happened to the SEV in the year after the sale. Did they raise to be equal to or close to half the sales prices? In most cases you will find no. Instead you generally find that areas are raised/lowered together in bulk based on the assessors whims. Not saying on occasion you would find a standout but for the most part predicting future SEV is impossible. Only way to really guess is in a growing or shrinking market to look at what has been happening in years past. Meaning, if the whole area goes up 10% it is likely most SEV's will go up ~the same %. Based on previous years increases, decreases you can go used your magic 8 ball from there.
Personally I think that property tax estimator is garbage. And they use 2019 data when you can get 2020 data here:
and the 2021 Summer taxes are now out as well so for those cities you can look up the 2021 data to get you closer.
As others have said, I am a broker and if you are looking at a home give me a message and I am happy to run you through the math to get to an estimate of taxes. Takes a few minutes and is not big deal, happy to help out.
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
5y
Michigan has some of the most complicated property taxes in the US.
First, Michigan uses the State Equalized Value (SEV) to determine INITIAL Taxable Value. The SEV is supposed to be 50% of the market value. Many people mistakenly believe the SEV is 50% of the purchase price, but it is supposed to be the market value.
Most cities have an Assessor that determines how much values have changed each year. Since they can't do each property individually, they use comparables to make broad generalizations to determine percent changes. Then these are applied to all properties in that city. Property owners get an annual update with their winter property tax bill.
Most Michigan properties receive TWO annual tax bills - one from the city and one from the county. Many banks handling tax escrow accounts for mortgages have mistakenly thought there was one tax due twice/year or totally missed one of the taxes.
Okay, so once you have your SEV, you then have to research your Taxable Value. Back in 1994(?) Michigan passed the Headlee Amendment (http://www.legislature.mi.gov/(S(k5m2va1uyfgwtbyjf4nqb1bx))/mileg.aspx?page=LoadVirtualDoc&BookmarkID=6536) that capped increases to the SEV annually to the lower of 5% or the state's Cost of Living increase. This was done to protect senior citizens on fixed incomes from being forced to sell their homes due to unaffordable property tax increases.
So now, the city assessor tracks the SEV, but homeowners are taxed based upon the Taxable Value. These two numbers diverge over time as market values increase, but tax increases are capped. The Taxable Value is uncapped and equated to the SEV upon a sale or other transfer of property ownership, with limited exceptions.
Once you know the Taxable Value, you can look up the property tax millage rates, which each city & county sets separately (with voter approval).
So, yes, it is very possible for property taxes to jump from $907 to $3200 if the seller has owned the property for quite some time.
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