How Do Property Taxes Work for Inherited Homes in Michigan?
The taxes don't stop when the owner dies, and probate doesn't pause tax foreclosure. Three things usually change: the deceased owner's principal residence exemption has to be rescinded within 90 days, which can raise the bill; the taxable value may reset the year after the transfer, unless it goes to a close family member; and any back taxes keep moving toward forfeiture while the estate is sorted out.
Reviewed by Dennis Fassett, founder of Dennis Buys Houses · Updated November 2026
This page is part of the Selling a House With Delinquent Property Taxes in Michigan guide, which has the 2027 deadline table. This one covers taxes on an inherited house.
First, Check for Back Taxes
Before the family decides who keeps the house, call the county treasurer. Find out which years are owed, the payoff, and whether the house has been forfeited. Settling an estate can take months, and the tax clock keeps running the whole time.
The Principal Residence Exemption After a Death
The principal residence exemption (PRE) cuts up to 18 mills of school operating tax from an owner's home. When the owner dies, they're no longer eligible.
- Rescind it within 90 daysThe personal representative or trustee files Form 2602 with the assessor within 90 days of the death. Expect the next bills to go up.
- Claim one the owner missedIf the owner lived there but the exemption was never on the roll, the estate can claim it for the current year and the three before it with Form 2368.
- An heir who moves inAn heir who owns and lives in the house can claim the exemption in their own name. It doesn't carry over from the deceased owner.
Will the Taxable Value Reset?
In Michigan, taxable value is capped while you own a house and "uncaps" to the full state equalized value the year after it changes hands, which can mean a much bigger bill. For transfers since December 31, 2014, an inheritance is exempt from uncapping if it goes to the owner's (or the owner's spouse's) parent, brother or sister, child, adopted child or grandchild, and the house isn't used commercially afterward. Other transfers usually uncap. Check your situation with the assessor.
The deceased owner's exemption doesn't pass to the heirs, and probate doesn't stop the tax clock. Handle the taxes alongside the estate, not after it.
Want a Number to Compare Against?
Tell me about the house and which tax years are behind. I'll give you a straight as-is number, and tell you if keeping it or listing it makes more sense.
When Siblings Share the House
Decide in writing who pays the taxes, insurance and utilities while the house is held, and how they get paid back when it sells. Letting the taxes slide because the family can't agree turns a disagreement into a foreclosure.
If the House Is in Probate
The estate is responsible for protecting the house, and that includes the taxes. A personal representative with authority can often sell before the estate closes. Line up the probate timeline with your tax deadline. (Selling a house in probate.)
Selling the Inherited House
Back taxes are paid at closing out of the sale. If the house is in good shape and there's time, listing it will likely bring the most. If it needs work, is full of belongings, or the deadline is close, selling it as-is to a real estate investor is the easiest route: no repairs, no clean-out, no showings, and the estate picks the closing date. (Selling an inherited house.)
Property Tax Isn't Capital Gains Tax
Property tax is the yearly bill on the house. Capital gains tax is on the profit when it sells, and inherited houses usually get a "stepped-up" basis that reduces it. They're separate, and solving one doesn't solve the other. (Capital gains on inherited property.)
Where I Fit, and Where I Don't
I'm usually a good fit when the deadline is close, when the house needs work or is vacant or inherited, or when you just don't want to deal with it anymore.
I may not be a good fit if you want to keep the house and can catch up on a payment plan, if one's available, or if it's in good shape and there's time to list it. In these cases a payment plan or a traditional listing will likely serve you better.
Either way — I'll tell you directly whether or not I'm a good fit.
Frequently Asked Questions
No. Current and past-due taxes stay with the property, and the estate is responsible for them.
No. The personal representative has to rescind it with Form 2602 within 90 days of the death.
Usually, unless you're the owner's (or spouse's) parent, sibling, child or grandchild and the house isn't used commercially. Then it's exempt from uncapping.
No. The deadlines keep running while the estate is open.
Yes, at closing out of the proceeds, as long as the sale closes before the foreclosure deadline.
Michigan Treasury – Principal Residence Exemption, including its guidance on deceased owners, and Michigan Treasury – Property Tax Forfeiture and Foreclosure.
Michigan Property Tax Guides
- Selling a House With Delinquent Property Taxes in Michigan (Full Guide)
- What Is the Michigan General Property Tax Act?
- Can You Lose Your Home Over $500 in Unpaid Taxes?
- Right of Redemption After Tax Foreclosure
- Tax Deed Sale vs. Tax Lien Sale in Michigan
- Property Tax Hardship Options by County
Sorting Out an Inherited House?
Tell me about the house and where the estate and the taxes stand. I'll give you a straight as-is number to work from.