#DetroitPropertyTaxes #MichiganRealEstate #HomeownershipStruggles
Are you a homeowner near Detroit, Michigan who is experiencing a sudden and significant increase in property taxes? π‘π It can be a shocking and frustrating situation to find yourself in, but you are not alone. Many homeowners in the area are similarly feeling the financial strain of rising property taxes.
If you recently received a tax assessment bill from your city’s taxing office revealing that your property taxes have soared to over $8000 annually, and your monthly mortgage payments have increased by $1000 per month, you may be wondering what your options are and how to handle this unexpected financial burden. In this article, we will explore the reasons behind such steep increases in property taxes and offer some strategic tips for managing the situation effectively.
Understanding the Increase in Property Taxes
You may be wondering why your property taxes have suddenly skyrocketed, especially if you do not live in a luxurious or high-end property. There are several factors that could contribute to this sharp increase, including:
1. City Reassessment:
– Cities periodically reassess the value of properties within their jurisdiction, which can lead to higher tax bills for homeowners.
– If your neighborhood has experienced an increase in property values, your property taxes are likely to reflect that change.
2. Tax Rate Adjustments:
– In some cases, city officials may decide to increase the tax rate, resulting in higher property tax bills for homeowners.
Dealing with Your Escrow Shortage
If you have an escrow account set up with your mortgage lender to cover expenses such as property taxes and homeowners insurance, a significant increase in your property taxes can lead to a shortage in your escrow account. Here’s what you can do to address this issue:
1. Contact Your Mortgage Lender:
– Reach out to your mortgage lender to discuss the shortage in your escrow account and explore potential solutions.
– Your lender may offer to spread the shortage amount over a period of time to lessen the immediate impact on your monthly payments.
2. Consider Refinancing:
– Refinancing your mortgage could allow you to restructure your loan and potentially lower your monthly payments, even with the increased property taxes.
Seeking Property Tax Relief
In the face of exorbitant property tax bills, it’s essential to explore avenues for obtaining relief and reducing your financial strain. Here are some options to consider:
1. Property Tax Exemptions and Discounts:
– Research whether you qualify for any property tax exemptions or discounts, such as those available to veterans, senior citizens, or individuals with disabilities.
2. Appealing Your Property Assessment:
– If you believe that your property has been over-assessed, you may have the option to appeal the assessment and potentially lower your tax bill.
3. Seeking Legal Assistance:
– Consider seeking the guidance of a real estate attorney or property tax specialist who can provide personalized advice and representation to help you navigate the complex process of challenging your property tax assessment.
Exploring Long-Term Solutions
While addressing the immediate impact of soaring property taxes and increased monthly payments is crucial, it’s also essential to consider long-term strategies for managing your housing expenses. Here are some proactive steps to take:
1. Budgeting and Financial Planning:
– Take a close look at your overall financial situation and consider making adjustments to your budget to accommodate the higher property tax bills.
– Explore opportunities to increase your income or reduce other expenses to offset the impact of rising property taxes.
2. Monitoring Property Value Trends:
– Stay informed about the real estate market in your area and keep track of property value trends.
– Understanding how changes in property values could impact your tax bills can help you anticipate and prepare for future increases.
Final Thoughts
Facing a sudden and substantial increase in property taxes can be overwhelming, but with the right approach and a solid understanding of your options, you can navigate this challenging situation effectively. By proactively addressing the shortage in your escrow account, exploring avenues for property tax relief, and implementing long-term strategies for managing your housing expenses, you can take control of your financial wellbeing as a homeowner near Detroit, Michigan.
Remember, it’s essential to seek personalized guidance from professionals in the real estate and financial industries to ensure that you are making informed decisions about your property taxes and overall housing expenses. With the right support and proactive approach, you can effectively manage the financial impact of increased property taxes and continue to thrive as a homeowner in your community.
Did you have a question?
Sounds like you have a few things working against you. The property taxes last year were likely assessed only on the value of the land and this year itβs the land and dwelling value. Detroit has some of the highest property taxes in the nation. Any shortage projected in your escrow account needs to be paid immediately or the monthly goes up enough to cover the shortage and the new higher tax amount. One thing that may help you; in my area a lot of people own second homes and the default property tax rate is the higher second home rate. We have to file to get the lower primary residence rate. Call your city/county tax assessor on Monday and see what they say.
This just happened to me, but I anticipated it.
Your taxes are more likely 4K annually. The taxes you didnβt set aside this year are being wrapped into next years mortgage.
Did noone tell you about property taxes on a new build?? You should have been anticipating this and saving extra for it
This is the sort of thing that shocks most people with new builds as the first year the property taxes are on vacant land. Then, comes the shock of the real property taxes the 2nd year.
I looked at very cheap homes in Detroit, and it was the property taxes that shocked me.
We build taxes. The first year is very low (lot) Second year it right sizes.
You’re blown away by something you could’ve easily checked before completing one of the largest financial decisions you were going to make in your life?
Yeah. Builder told us taxes on new construction would be 9k to 10k. turned out to be 14k (now 15k) and we were not prepared for this. mortgage company told me the same thing. I asked them to allow me to pay the needed escrow over time as part of my mortgage and they allowed it. I can’t remember if they gave me 24 or 48 months, but it helped a lot.
It may or may not help but you should be able to appeal the assessment. There should be local companies that can help you for a fee (usually a portion of the savings, if the appeal is won) or you can appeal yourself.
Did you look at property taxes of similar homes near you before you bought? If they are similar, why are you shocked? If you didn’t look, why are you shocked? $8K in property taxes is not abnormal in America today for a single family home.
If you did look, and they are much lower, then investigate why.
Had similar situation, we told the escrow company to use the future value of the house versus the lot value for the first year. It wasn’t exact but it was better than lot value. I know this doesn’t help you know, but maybe it will help someone else.
Likely scenario:
1. Initial escrow was set based on property assessed as vacant land.
2. Taxes were reassessed in 2023 as improved land.
3. Escrow review likely didn’t happen until close to the end of the year.
Now you will need to make up for the property tax shortage from last year as well as the new higher rate going forward.
You generally have two options to make up the shortage. Pay in a lump sum, or pay increased payments over 6-12 months until shortage is covered.
Lastly you should verify if property taxes have increased between 2023 and 2024, this could result in a escrow shortage in 2025.
You bought your home last year….If you are in a place like Royal Oak, Birmingham, Berkley or Ferndale, Northville, etc., your taxes are assessed on the “new” value of your property and often catches people off guard. Detroit taxes are even a higher millage than those suburbs, but the property values are often lower. You have two things working against you–a shortage AND an increase, so you have to pay both. You can also challenge your property taxes, but hard to argue what you paid isn’t a fair assessment. Also make sure you have homesteaded your property with the right paperwork! (Edited because I didn’t read OPs post properly.)
This is common and expected with new builds. The finance company should have accounted for this when determining the amount that goes into escrow every month
New build, ouch! Yeah, life is cheaper when you are not the nicest house in the neighborhood and are living off an assessment that is a few years old…
Dispute the assessment. Bring comps of similarly priced homes. You’re fighting the valuation of your home. I did this in MI a couple of years ago during the boom. They cut the increase in half because the township wasn’t prepared to justify why my assessment value was 50k more than similar homes in the area.
Oakland county? Welcome. We have some of the highest property taxes in the country.
Also, thatβs why you use local lenders. In Michigan, property taxes get reassessed when the home is purchased. So if the property youβre purchasing hasnβt been bought or sold in a long time (or if itβs a new build so the current taxes are for vacant land), the current tax bill is way, way off what the new bill will be. If your lender is estimating based on current taxes not knowing itβs due for re-assessment, this will happen to you.
It was probably taxed as land and now itβs being taxed as a house. Welcome to being a homeowner!
Can you apply for a homestead exemption to lower your taxes?
Yeah, kinda how new builds work.
Did you file your homestead exemption with the assessing office?
You bought a new build so first year assed on non improved land. New assessment is for the whole house. Taxes will change on that. Your original taxes are on your closing statement.
Your escrow is short because itβs based on old tax rate now you have to pay back the under amount. In February the mortgage company will run an escrow analysis to account for any increases in home owners insurance and taxes to adjust your monthly payment.
Its normal for new builds and 2nd year assessments
Very common with new construction. Your previous taxes were just for the land with no house on it. Now it includes the house. Get the tax assessment details (it’s public info, super easy to get from your county) and the home value will probably be about 1/3 what you paid for your home (or what it’s worth). If it’s about that, it’s probably correct. If it’s not around 1/3 the price, there could be an error.
BTW, $8000 per year in taxes for some Detroit suburbs is about the going rate. When looking at the county taxes, look at your neighbors with similar homes to compare the taxes they pay. Are they similar?