Property taxes: Detroit vs. The Pointes, Birmingham, Bloomfield, Ferndale, etc. (Troy: real estate market, insurance)

[Hiruko]

How do property tax rates in the City of Detroit differ from those in suburban areas like The Pointes, Birmingham, Bloomfield, Ferndale, Royal Oak, and others? How would taxes on a single-family home valued at $600k, for example, compare?

[DTWflyer]

While I don't know the specifics of tax rates in each individual municipality, its really hard to give a true apples-to-apples comparison.
In Michigan, like a lot of places, the net property tax value paid is a function of property value and tax rates for municipal services and public schools.
Property values are impacted and higher in areas that have (real and perceived) better municipal services & amenities and better schools.
Municipalities that have higher property values are able to receive more revenue from property taxes and have better funded services and better-funded school districts.
Thus a more in-demand real estate market and higher property values.

Thus, its a bit of circular logic....

The reality is when looking at a $600k house, its all based on supply and demand and a $600k house in parts of Detroit will be enormous in comparison to what $600k will get you in Birmingham.
The actual difference in what you pay per year in property taxes may be a difference of $1-2K per year based on municipality.

Does that really impact where you want to live? I don't know.
Everyone likes to complain about taxes, but how many people really truly have that has a deciding factor on where they want to live? I don't know but I doubt its in their top 3 reasons.

[Hiruko]

Originally Posted by DTWflyer

While I don't know the specifics of tax rates in each individual municipality, its really hard to give a true apples-to-apples comparison.
In Michigan, like a lot of places, the net property tax value paid is a function of property value and tax rates for municipal services and public schools.
Property values are impacted and higher in areas that have (real and perceived) better municipal services & amenities and better schools.
Municipalities that have higher property values are able to receive more revenue from property taxes and have better funded services and better-funded school districts.
Thus a more in-demand real estate market and higher property values.

Thus, its a bit of circular logic....

The reality is when looking at a $600k house, its all based on supply and demand and a $600k house in parts of Detroit will be enormous in comparison to what $600k will get you in Birmingham.
The actual difference in what you pay per year in property taxes may be a difference of $1-2K per year based on municipality.

Does that really impact where you want to live? I don't know.
Everyone likes to complain about taxes, but how many people really truly have that has a deciding factor on where they want to live? I don't know but I doubt its in their top 3 reasons.

Thank you for your reply. I'm from the Chicagoland area where property tax burdens vary wildly between municipalities. A $500k home in one suburb can easily match that of a $1.5 million home in another. Are property taxes typically higher in the City of Detroit than in the suburbs?

[keraT]

Detroit has the highest property tax but the houses are worth much less. So the actual money you are paying for same size house will be lower even thought the percentage you are paying in property tax compared to your house value is higher.


Generally in suburbs the property tax is 1.5-2% vs. in Detroit it is ~2.5%. So you are looking at a difference of <1%, which is not much considering Michigan houses aren't as expensive as Chicago. This is generalization but on average the houses in suburbs are worth 100K more than similar house in city, so you are paying a grand more in suburbs even with lower tax rate. But Detroit does have city tax which the suburbs doesn't.


This is all general information. if you are interested in specific house you can find the tax previously paid on it from city or online

[NOLA101]

Detroit would have highest taxes, then the Pointes, then Birmingham. But all would be high for Michigan tax standards.

But I doubt many buyers are comparing these three.

Birmingham is by far the most upscale/expensive, and buyers are probably also looking at adjacent Bloomfield Hills. The Pointes are their own enclave, and not really on the desirable side of the metro. Also about 50 years past their prime as the region's "A" location. Detroit doesn't have more than one or two neighborhoods that have a large number of upscale, expensive homes.

In terms of regional desirability it would probably go something like this

A+ location- Birmingham-Bloomfield (essentially Winnetka)
A location- Northville, Franklin, Orchard Lake (maybe something like Hinsdale)
A- location- Rochester/Rochester Hills, Novi, Oakland Township, GP Farms/Shore/Park, Huntington Woods (maybe on the level of Burr Ridge)

Then a bunch of random nice communities like Troy, Grosse Ile, West Bloomfield, etc. etc. (i.e. any nice Chicagoland suburb).

A 600k home in Birmingham would be less than half the size of a 600k home in the Pointes. And a 600k home in Detroit would be among the nicest in the city.

[craig11152]

Its important to factor in how long a house was previously owned because the longer a house is occupied in Michigan the larger the potential tax increase for the next buyer. See Michigan's 1994 Proposal A for an explanation.

Another thing to mention is $4000 a year in property taxes may buy you a lot more services in one place over another. More bang for your buck as it were.

[RockChester]

https://www.michigan.gov/documents/t...t_648639_7.pdf

Detroit is in Wayne county. Millages vary by school district in any given city. Detroit has one of the highest taxes in the state at 67.6227 mills according to the 2018 figures. That means almost $68 for every $1000 of SEV which is half of the property's selling price. If you buy a house in Detroit and paid $200,000 for it, your yearly property taxes would be $6762.27

DETROIT CITY SCHOOL DI 67.6227

[usroute10]

Originally Posted by RockChester

https://www.michigan.gov/documents/t...t_648639_7.pdf

Detroit is in Wayne county. Millages vary by school district in any given city. Detroit has one of the highest taxes in the state at 67.6227 mills according to the 2018 figures. That means almost $68 for every $1000 of SEV which is half of the property's selling price. If you buy a house in Detroit and paid $200,000 for it, your yearly property taxes would be $6762.27

DETROIT CITY SCHOOL DI 67.6227

The high Detroit tax rate is hard to swallow. But if you have a desire to be a resident of Detroit and want to contribute to returning it to a high quality city, the state of Michigan has a Principle Residence Exemption (PRE) for all folks who live in the residence they own.

A PRE exempts a principal residence from the tax levied by a local school district for school operating purposes up to 18 mills

This means that the Detroit property tax bill could be reduced by 25% if you live in the residence.

https://www.michigan.gov/taxes/0,467...0891--,00.html

In addition, the State has an initiative called the Neighborhood Enterprise Zones, in which houses located within certain designated areas can have their property tax reduced by as much as 50% or more for 15 years so long as these residents commit to spend a specified minimum amount in home improvements.

http://www.degc.org/wp-content/uploa...edited_pg6.pdf

https://detroitmi.gov/node/4561

[RockChester]

You shouldn't have to jump through additional hoops to lower your taxes. Most people with the money to buy a house wouldn't buy in Detroit. In addition to high property taxes, Detroit also has a city income tax. Your insurance costs are really high in Detroit. Honestly, unless you have a lot of money and don't mind blowing a lot of it unnecessarily, I'd buy elsewhere, quite frankly. Most people don't want to spend twice as much for everything.

[y2c313]

Blowing it unnecessarily is a matter of opinion. Owning a house in Detroit is a high risk, high reward proposition. It's definitely a risk but the more good folks that buy, fix up and invest in the city, the better the overall city becomes and the higher the return investment can be. The suburbs don't have much growth potential imo.