🏠 Don’t Be Fooled by the Tax Bill on Zillow: Why Your Property Taxes Will Likely Be Higher After You Buy (and How to Prepare)
When browsing homes on sites like Zillow, Realtor.com, or Redfin, the property tax numbers listed can look surprisingly affordable—sometimes even lower than your current rent. But here’s a key truth that catches many buyers off guard:
Those tax numbers usually reflect what the seller is paying—not what you’ll owe after closing.
Let’s break down why that happens in Michigan and what you can do now to avoid a surprise hike in your mortgage payment down the road.
💡 What You See Online Is the Seller’s Tax Bill
Most listing sites pull tax data directly from public records. What you’re seeing is the seller’s current annual tax bill—based on a taxable value that’s likely been capped under Michigan’s Proposal A.
Proposal A limits how much a property’s taxable value can increase each year—5% or the rate of inflation, whichever is lower—until the property is sold.
📈 What Happens When You Buy? The Tax “Uncapping” Explained
When a property sells, the taxable value gets uncapped and reassessed to reflect the home’s current market value (usually 50% of it, per SEV rules).
So while the seller may have been paying taxes based on a taxable value of $165,000, you might be reassessed at $250,000 the day you close.
Here’s how that can look:
- Listing price: $250,000
- Zillow tax estimate: $3,100/year
- Post-sale reality: $4,500–$5,000/year
(depending on your local millage rate)
🛡️ How to Prepare: Avoid Escrow Surprises
If your mortgage payment includes an escrow account (which most do), your lender will estimate property taxes and include that in your monthly payment.
But if they base it on the seller’s old tax bill, your escrow can come up short—and that means you’ll get a surprise bill or an increase in your monthly mortgage payment later.
🔧 Here’s how to avoid that:
- Request a “tax uncapping estimate” based on the expected SEV after your purchase.
- Talk to your loan officer (like us at BrightSide Lending!) about budgeting your mortgage payment around the projected tax rate—not the current one.
- Consider setting aside extra funds during your first year to buffer against a possible escrow shortage, especially if your purchase price is much higher than the previous owner’s value.
✅ Final Thought
Buying a home comes with plenty of moving parts, and Michigan’s property tax system adds a twist many buyers don’t see coming. But with the right planning, you can avoid the stress of an unexpected tax hike.
At BrightSide Lending, we walk you through every number—not just your rate, but what your true cost of ownership will be. That way, you buy with clarity and confidence—not with a surprise letter from your escrow company.
