9 Things to Know About Property Tax Uncapping in Michigan

Property tax uncapping in Michigan is the reason a new owner's tax bill can run thousands of dollars above the seller's. While someone owns a home, its taxable value can rise only a little each year, and the year after a sale it resets to half of market value. Here are the nine things buyers in Rochester and across Michigan should know before and after closing.

The nine things to know, in short:

1. Taxable value uncaps the year after a sale
2. The yearly cap is 2.7 percent for 2026
3. SEV is half of value, taxable value is capped
4. Estimate from half the price times local millage
5. On the bills for the year after closing
6. The buyer files Form 2766 within 45 days
7. The PRE removes up to 18 school mills
8. Some family transfers do not uncap
9. A joint tenancy with the original owner does not

1. Why did my property taxes go up so much after I bought a house in Michigan?

Michigan property taxes are figured on taxable value, which is capped while one owner holds a home and uncaps the year after a sale. The new owner's taxable value resets to the state equalized value, about half of market value. A seller who owned for many years may have a taxable value far below that, so the buyer's bill jumps.

White Lake Township's 2026 guide gives a clear example: a home with a true cash value of $400,000 had a $120,000 taxable value under the old owner and $210,000 the year after the sale. At Rochester Hills' 2025 homestead total of 30.8553 mills, that moves a bill from about $3,703 to about $6,480.

Budgeting from the seller's tax line on the listing is the mistake that causes the shock. That number reflects the seller's capped value, not yours.

2. How much can my property taxes increase in Michigan each year?

Under MCL 211.27a, taxable value can rise each year by the lesser of 5 percent or the rate of inflation, as long as the owner does not change. The State Tax Commission set the 2026 inflation rate multiplier at 1.027, so most capped homes could rise no more than 2.7 percent in 2026, plus any new additions.

On a capped taxable value of $120,000, a 2.7 percent rise adds $3,240 of taxable value. At 30.8553 mills, the Rochester Hills total in its Rochester Community Schools area, that is about $100 more a year. Your yearly assessment notice shows the taxable value, so you can check the change.

The cap limits taxable value, not your bill. A new voter-approved millage can still raise the total, so a bill can climb more than 2.7 percent in a year without anything being wrong.

3. What is the difference between SEV and taxable value in Michigan?

State equalized value, or SEV, is half of a home's true cash value, the usual selling price, as set by the assessor and equalized by the county. Taxable value is the number your tax is actually figured on. It is the lower of the capped value or the SEV, so for a long-held home it often sits well below the SEV.

A strong read of a Michigan assessment notice finds both lines. If the SEV is $200,000 and the taxable value is $120,000, the $80,000 gap is roughly what uncaps for the next owner. Buyers working with Rochester realtors can ask for the seller's latest notice before making an offer.

Treating SEV as the taxed number overstates a current owner's bill. Treating the current taxable value as permanent understates the next owner's bill. Both errors come from reading one line instead of two.

4. How much will my property taxes be after I buy a house in Michigan?

A fair first estimate of a Michigan buyer's property tax is half the purchase price, times the local homestead millage, divided by 1,000. The home uncaps to the SEV, not to the price, and the assessor sets SEV from a study of past sales. The real figure arrives with the first assessment notice after the sale.

Redfin put Rochester's median sale price at $561,744 in June 2026. Half of that is about $280,872, and at the city's 2025 homestead total of 32.4246 mills the yearly tax would be about $9,107. In Rochester, Rochester Hills and Oakland Township, where The Delia Group works, the school district changes that total, so confirm it for the exact address.

Typing the full price into an online calculator overstates the tax, and copying the seller's bill understates it. Use half the price and the right millage.

5. When does the uncapping show up on my Michigan tax bill?

Uncapping takes effect in the calendar year after the year of the sale. A home bought in 2026 gets a new taxable value for 2027, which flows into the 2027 summer and winter tax bills. Michigan assessors mail notices before the March Board of Review, so the new number usually appears in late winter.

Look for the assessment notice in the first months of the year after you close, and compare its taxable value with the SEV. In 2026, March Board of Review appeal meetings began on the second Monday in March. Commerce and Oakland townships, for example, mail summer tax bills July 1 and winter bills December 1.

Waiting for the July bill to check the number wastes your chance to appeal. If the assessed value looks more than half of what the home is worth, the March Board of Review is where to raise it.

6. Who fills out a property transfer affidavit in Michigan?

The new owner files the Property Transfer Affidavit, Michigan Treasury Form 2766, with the assessor of the city or township where the property sits, within 45 days of the transfer. The form tells the assessor a sale happened, which is what uncaps taxable value the next year. It is required even when no deed is recorded.

A clean closing file shows the affidavit was filed, with the date. If the title company filed it for you, ask for a copy. If not, the form is short and goes straight to the local assessor.

Skipping it does not avoid uncapping. Under MCL 211.27b, the owner owes the taxes that should have been levied, plus interest, and a penalty of $5 a day after the 45 days, up to $200 for a home owned and lived in as a principal residence.

7. What does the principal residence exemption mean for my Michigan tax bill?

Michigan's principal residence exemption, or PRE, exempts a home you own and live in from local school operating taxes, up to 18 mills. New owners claim it on Form 2368 with the local assessor. Filing by June 1 covers that year's summer and winter levies, and filing by November 1 covers the winter levy.

The difference is easy to see in Rochester. The city's 2025 total was 32.4246 mills with the exemption and 50.4246 mills without it. On a taxable value of $210,000, those 18 mills are worth $3,780 a year.

Assuming the seller's exemption carries over is the trap. It belongs to the owner who claimed it. A buyer who never files Form 2368 can pay the higher non-homestead total even though the home is their residence.

8. How do I avoid uncapping property taxes in Michigan when a family member takes the house?

Michigan law says certain family transfers of a home are not a transfer of ownership, so taxable value stays capped. Under MCL 211.27a, that covers a transfer to a spouse and a transfer of residential property to the owner's or spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson or granddaughter.

For the relative exception, the property cannot be used for any commercial purpose after the transfer. The assessor or the Treasury can ask for proof, and the new owner has 30 days to provide it. A strong plan names the relationship and keeps records ready.

Assuming every relative qualifies is the costly mistake. Nieces, nephews, cousins and friends are not on the list, so their transfers uncap. Any commercial use after the transfer breaks the exception, so ask the assessor before renting the home out. Failing to prove the exception can bring a $200 fine.

9. Does adding someone to a deed uncap property taxes in Michigan?

Adding someone to a deed as a joint tenant does not uncap Michigan property taxes when at least one of the joint tenants was an original owner of the property. MCL 211.27a treats creating or ending that kind of joint tenancy as outside the definition of a transfer, as long as an original joint tenant stays on title.

The State Tax Commission's Transfer of Ownership Guidelines say it plainly: if an original owner or their spouse is a co-tenant in the new joint tenancy, taxable value does not uncap. A strong answer from an attorney names the type of tenancy on the new deed.

A deed that drops the original owner, or that does not create a joint tenancy, can be read differently. Have an attorney draft it and ask the assessor how it will be treated before you record it.

Frequently Asked Questions

What is Michigan Proposal A?

Proposal A of 1994 amended the Michigan Constitution so that a home's taxable value grows by no more than the lesser of 5 percent or inflation each year until it changes owners. A transfer of ownership uncaps the taxable value in the following calendar year.

How can I lower my property taxes in Michigan?

Start by making sure your principal residence exemption is on file, since it removes up to 18 school mills. If your assessed value looks higher than half of what the home is worth, appeal at the March Board of Review. Lower income owners may also qualify for the Homestead Property Tax Credit, which for 2025 carried a $71,500 household resources limit and a $165,400 taxable value limit.

Is Michigan considering getting rid of property taxes?

Not on the November 2026 ballot. A petition drive to eliminate property taxes announced in May 2026 that it fell short of the 446,198 valid signatures it needed, according to Bridge Michigan. It was the group's second failed attempt since 2024.

How much is the tax when you buy a house?

In Michigan the seller pays the real estate transfer tax, $3.75 per $500 to the state and $0.55 per $500 to the county in Oakland County, or 0.86 percent combined. The buyer's main tax cost is the yearly property tax, which resets the year after the purchase.

What is Michigan's property tax rate?

There is no single statewide rate. Each community and school district sets its own total. In Oakland County, 2025 homestead totals ran from 24.5296 mills in part of Commerce Township to 62.2247 mills in Hazel Park, and the City of Rochester was 32.4246 mills.

Talk to The Delia Group about the tax bill before you buy

The Delia Group is a Rochester, Michigan real estate team working with buyers and sellers in Rochester, Rochester Hills, Oakland Township and across Oakland County. A home's SEV, its school district and its local millage together predict the tax bill a new owner will see after uncapping. Buyers comparing the best real estate agents in Rochester can start there.

This article is general information for Michigan homeowners and buyers, not legal or tax advice. Uncapping rules, exemptions and penalties come from MCL 211.27a and related statutes, and rates change every year. Confirm your own situation with a real estate attorney or a tax professional.