Real Estate Taxes

As you know, if you own a home or other real estate, you need to pay real estate taxes. In Ann Arbor, you get billed twice a year - once at the beginning of July, and again at the beginning of December. Here are some tax highlights.

  • How Your Tax Bill is Calculated. The municipal assessor places a value on your property. This is finally expressed as its State Equalized Value (SEV). The SEV is multiplied by the tax rates set by the various taxing authorities. The result is your tax bill. If you disagree will the assessed value, you can appeal to the local Board of Review, and then to a state agency, if necessary.
  • Principal Residence Exemption. This used to be called the homestead exemption. Most homeowners qualify for this reduction in their real estate tax. When you buy a house, there's an affidavit you need to complete and file with the assessor by May 1 to get the exemption for that calendar year. Missing the deadline won't be a problem if the seller had the exemption in place at the beginning of the year.
  • Transfer Tax. When real estate is sold, there's a transfer tax. In Washtenaw County, it's $8.60 for every $1,000 of the sales price. The seller pays it, unless a different arrangement has been negotiated by the parties.
  • The Cap. There's a state-imposed limit or cap on how much your real estate tax can be increased in any one year. When you sell your real estate, the tax is "uncapped" and the new owner's tax is based on the current value of the property.
  • Pro-Ration of Taxes. When real estate is sold, the buyer and seller reach agreement on how the current year's tax bill will be allocated between them.

The attorneys at the Ann Arbor firm of Hamilton, London, & Davis can assist you in property tax matters.

Categories: Real Estate Law