Michigan Property tax information

When closing on Metro Detroit Real Estate you will notice on the first page of the HUD Settlement paper (the page with all the numbers) tax pro-rations

The tax pro-rations are the money the buyer owes the seller for the unused portion of Michigan property tax that the seller has paid.   In Michigan Summer tax bill is sent out on July 1 and the Winter tax bill is sent out on December 1.  In most Michigan counties the summer tax bill is the bigger bill.  In most Michigan counties the tax bill is paid forward.  So the winter tax bill is paid on Dec 1 2007 and covers from Dec 1 2007 until Nov 30 2008.

To explain this easily lets say the summer property tax bill is $2400 and the winter property tax bill is $1200.  Let's say we are closing October 1 2008.  So the seller paid the summer tax bill ($2400) as of July 1 2008.  So breaking it down each month  is $200.  (2400 divided by 12 = $200)  So if the seller paid the in July and we are closing in October, the seller will have used up  3 months of his money ( July, August, September)  So the buyer owes the seller 9 months of the unsed summer tax money.  9 months times $200 = $1800

The Michigan property tax pro-rationsfor the winter tax is figured the same way.  The seller paid the winter tax on Dec 1,2007.  So the seller has used up taxes all the way to October 1,2008.  So the Seller used Dec, January, February, March, April, May, June, July, August, September.   So the seller has used up ten months.  So the buyer only owes the seller 2 months of the unused taxes.  So the winter tax bill was $1200 divided by 12 months = $100 a month.  So the buyer owes $200 for the winter property taxes.

So the total Michigan property tax pro-rations the buyer owes the seller as of October 1, 2008 is $1800 (summer tax) and $200 (winter tax) for a total of $2000.

For more on closing costs, Michigan mortgages,  Metro Detroit mortgages, or fighting your Michigan property tax assessment, understanding your Michigan tax bill