Property taxes are a meaningful carrying cost of homeownership in Michigan — and on a luxury home, the numbers are larger and the rules around uncapping at sale matter more. Here's how it works for Oakland County owners, and where taxes fit when buying at the high end in our Oakland County luxury real estate guide.
Assessed value vs. taxable value
- Assessed Value (AV): This is half of your property's true cash value, determined by your local assessor. It represents 50% of what your home would likely sell for on the open market.
- Taxable Value (TV): This is the value on which your property taxes are actually calculated. Due to Proposal A, enacted in 1994, your taxable value can only increase by the rate of inflation or 5%, whichever is less, as long as you own the property. When a property is sold, the taxable value is "uncapped" and reset to the assessed value in the year following the sale.
Millage rates
Property taxes are calculated using "millage rates." A mill is $1 of tax for every $1,000 of taxable value. Millage rates are set by local taxing authorities (e.g., school districts, cities, counties) and can vary significantly by location.
Calculating your property tax
Your annual property tax is calculated by multiplying your property's taxable value by the total millage rate (expressed as a decimal). For example, if your taxable value is $100,000 and the total millage rate is 30 mills (or 0.030), your tax would be $100,000 * 0.030 = $3,000.
Homestead exemption
If your property is your primary residence, you may be eligible for a "Principal Residence Exemption" (formerly Homestead Exemption). This exempts your home from a portion of the local school operating taxes, significantly reducing your tax bill. You must file an affidavit with your local assessor to claim this exemption.
Important dates
- December 31: Occupancy date for Principal Residence Exemption.
- February 1: Property tax bills are typically mailed.
- July 1 and December 1: Common due dates for summer and winter tax bills, though this can vary by municipality.
It's important to review your property tax assessment annually and understand how changes in assessed or taxable value might impact your payments. If you believe your assessment is incorrect, you have the right to appeal to your local Board of Review.