Travis Bunn
Founder, AppealDesk · Published March 27, 2026 · Updated August 2, 2026
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Updated August 2026
Michigan is one of the few states where inheriting a house can, by itself, rewrite the property tax bill. The reason is Proposal A of 1994. While one owner holds a property, its taxable value can only grow by the inflation rate or 5 percent per year, whichever is less. A transfer of ownership breaks that cap: under MCL 211.27a(3), the taxable value for the calendar year following the transfer resets to the state equalized value, which is 50 percent of the property's true cash value. Assessors call this uncapping.
If your parents bought the house decades ago, the gap between its capped taxable value and its state equalized value can be enormous, and the tax jump after uncapping lands on you, the heir. But Michigan also wrote a specific escape hatch for families, added a mandatory affidavit with real penalties for skipping it, and kept a normal appeal path open when the new number is simply wrong. This guide walks through each piece in the order you will actually meet it.
Michigan taxes are computed on taxable value, not on assessed value. Every parcel carries both numbers. The state equalized value tracks half of true cash value and moves with the market. The taxable value started at the same place when the current owner acquired the property, but since then its annual growth has been limited to the lesser of 5 percent or the inflation rate, plus adjustments for physical additions and losses. In a market that appreciated faster than inflation, the two numbers drift apart, year after year, for as long as ownership does not change.
Suppose, as a purely hypothetical illustration, a Michigan house has a state equalized value of $100,000 but a taxable value of $55,000 after decades of capped growth. The owner dies and a non-exempt heir takes title. The following calendar year, the taxable value resets to the SEV, and every mill levied now applies to roughly $45,000 more value than it did the year before. Nothing about the house changed. Only the ownership did.
One consolation: uncapping is a one-time reset, not a permanent loss of protection. Once the taxable value equals the SEV, Proposal A's cap resumes for the new owner, and the two values begin drifting apart again from the new base.
The State Tax Commission's Transfer of Ownership Guidelines are blunt about this: a conveyance of a deceased person's property, whether directed by a will or by a probate court under intestate succession, is a transfer of ownership. Title generally passes to devisees or heirs at the time of death, and the uncapping follows in the next calendar year.
Two timing details matter for estates:
Joint tenancy and life estate situations follow their own rules. Michigan courts have held that the death of a joint tenant is not itself a conveyance in some configurations, and a retained life estate generally delays the transfer until the life tenant dies. If the deed involved either arrangement, get the specific facts in front of the assessor or an attorney before assuming the value will or will not uncap.
Since December 31, 2014, Michigan law has exempted a transfer of residential real property from uncapping when the transferee is the transferor's, or the transferor's spouse's:
The single ongoing condition: the property must not be used for any commercial purpose following the conveyance. Keep it as a residence, whether you live in it or a family member does, and the parent's capped taxable value carries over to you. Convert it to a commercial use and the exemption is gone. The statute also gives teeth to the paperwork: on request from the assessor or the Department of Treasury, you must furnish proof of the qualifying relationship within 30 days, and a false claim carries a $200 fine.
Three practical points heirs miss:
Note the earlier version of this law, in effect during 2013 and 2014, covered only first-degree relatives. If an assessor uncapped a sibling or grandchild transfer that happened before December 31, 2014, that may have been correct under the old text. Timing of the transfer controls which version applies.
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Whoever receives the property must file a Property Transfer Affidavit, Treasury Form 2766 (formerly L-4260), with the city or township assessor within 45 days of the transfer. MCL 211.27a(10) makes the filing mandatory, and it applies even when you are claiming the family exemption. In fact the affidavit is how you claim it: the form is where you disclose the relationship that keeps the cap in place, and assessors now routinely ask for supporting documents such as birth or marriage certificates.
Skipping the affidavit is expensive in two tiers:
If you receive a delayed uncapping notice, MCL 211.27b gives you 35 days to appeal to the Michigan Tax Tribunal, but the appeal is limited to whether a transfer of ownership actually occurred and to arithmetic errors. You cannot argue value in that proceeding. File the affidavit on time and you never face this trap.
Separate from the taxable value cap, Michigan exempts an owner-occupied principal residence from up to 18 mills of local school operating tax. That Principal Residence Exemption belonged to the person who died, and it does not transfer to you.
On a house with an 18-mill PRE at stake, every $100,000 of taxable value is $1,800 per year of school operating tax. Whether the inherited home keeps that exemption is often worth as much as the uncapping question itself.
Estates rarely leave a house to exactly one person. When siblings take title together as tenants in common, Michigan's partial uncapping rules come into play, and they interact with the family exemption in ways worth planning around.
The State Tax Commission's guidelines treat a transfer of an undivided fractional interest as a partial transfer of ownership. If a one-third tenancy in common interest transfers in a way that is not exempt, the following year's taxable value is computed as one third of the state equalized value plus two thirds of the capped value. Tenancy in common is one of only a handful of situations where Michigan permits a partial uncapping at all; most non-exempt transfers uncap the entire parcel.
Here is where the family exemption earns its keep a second time. Because MCL 211.27a(7)(u) covers transfers between brothers and sisters, a later buyout, where one sibling purchases the others' inherited shares of the residential property, can also be exempt from uncapping, provided the house is not being used for any commercial purpose. The exemption does not depend on the transfer being a gift; it depends on the relationship and the residential use. Each buyout still needs its own Property Transfer Affidavit documenting the sibling relationship.
Contrast that with selling a share to a co-heir's spouse, a cousin, or an outside investor: those transfers fall outside the statutory relative list, and the corresponding fraction of the taxable value uncaps the following year.
The deadlines that decide the tax outcome are concentrated in the first year or so after death:
Michigan's inheritance tax applies only to inheritances from people who died on or before September 30, 1993, per the Department of Treasury. The state estate tax that replaced it was a pickup tax tied to a federal credit that Congress phased out, so it has collected nothing on deaths in the modern era. For a current Michigan inheritance, the state levies no death tax at all.
Do not let that lull you, though. The absence of a death tax is exactly why the property tax mechanics above are the entire state-tax story for most Michigan estates, and why an avoidable uncapping is often the single largest tax mistake an heir can make here.
Uncapping sets taxable value equal to state equalized value, which makes the assessor's opinion of true cash value suddenly decisive. The State Tax Commission warns assessors that they may not simply chase sale prices, and the same logic protects heirs: the SEV must reflect what the property would actually bring, in its actual condition. Inherited homes are frequently dated, deferred-maintenance properties that the record card still describes in better condition than reality.
Suppose a hypothetical heir in Genesee County inherits a house the assessor now carries at a true cash value of $201,000, roughly the statewide median, for an SEV of $100,500. If the roof, furnace, and kitchen date to the 1990s and similar unrenovated houses on the block have been selling near $170,000, the SEV supported by the evidence is about $85,000. At a typical Michigan effective tax rate near 1.38 percent of market value, that gap is worth several hundred dollars every year, compounding forward because the corrected value becomes the new capped base.
The path, cross-referenced in our Michigan property tax appeal guide:
Comparable Michigan sales, a valuation analysis, and a filing guide for your township or city, in one packet.
The bottom line for Michigan heirs is that almost every dollar at stake is decided by paperwork and calendar, not by negotiation. The family exemption, the affidavit, the PRE filings, and the March protest each have a form and a deadline. Handle those four, and the tax bill on an inherited Michigan home is usually either unchanged or defensible. Miss them, and the state's default machinery, uncapping plus retroactive billing, runs on its own.
No. The statute lists mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, and granddaughter of the transferor or the transferor's spouse. Nieces, nephews, aunts, uncles, and cousins are outside the list, so a transfer to them uncaps the taxable value even when the property stays residential. Great-grandchildren are also not named in the statutory text, which matters for multi-generation estates.
Contact the assessing office immediately with your Property Transfer Affidavit and proof of the relationship, such as a birth certificate. If the uncapping stands on the assessment notice, protest it at the March Board of Review, and be prepared to continue to the Michigan Tax Tribunal. Also remember the burden runs both ways: the statute lets the assessor demand proof of the qualifying relationship within 30 days of a request.
The assessor must retroactively uncap the taxable value back to the year after the transfer, recalculate every year since, and bill the difference with interest and penalties from the original due dates, plus the $5 per day filing penalty up to $200. There is no limit on how many back years can be billed when the cause was the transferee's failure to file. Your appeal rights at that point, under MCL 211.27b, are limited to disputing whether a transfer occurred and fixing arithmetic.
No. A conveyance to the decedent's spouse is excluded from the definition of transfer of ownership under MCL 211.27a(6), so the cap simply continues. The spouse should still confirm the Principal Residence Exemption remains in their own name and notify the assessor of the title change.
It can be. The State Tax Commission's guidelines recognize exemptions covering certain trust distributions and life estate terminations that go to the same close relative list, with the same residential, no commercial use condition. But trust mechanics decide the outcome, including who the beneficiaries are and when interests became present interests. File the Property Transfer Affidavit either way and have the assessor or an estate attorney confirm the exemption applies to your trust's language.
No. The PRE that the deceased owner held does not carry over. You must own and occupy the home as your principal residence and file your own Form 2368 with the assessor, by June 1 for that year's summer school operating levy or November 1 for the winter levy. If you miss both dates, you can ask the Board of Review to grant the exemption for the year claimed and up to three years back where you actually qualified.