Can I Lose My Home Over $500 in Unpaid Taxes?

The Surprising Truth About Property Tax Foreclosure in Michigan

It might sound extreme, but in Michigan, the answer is yes — you can lose your home over $500 in unpaid property taxes.

And it happens more often than most people realize.

Even a small amount of delinquent taxes can set off a legal process that ends in foreclosure and permanent loss of ownership.

That’s because Michigan follows a strict tax deed foreclosure system with tight timelines and very little flexibility once the process begins.

This article explains how small debts can lead to big consequences, and why understanding the foreclosure process under Michigan law — particularly the General Property Tax Act — is critical for any homeowner who’s fallen behind.

Small Tax Debt Can Lead to Foreclosure

The amount of money you owe doesn’t matter as much as how long the debt goes unpaid.

Under Michigan law:

Property taxes are due in the summer and winter of each year.
If they go unpaid, they are considered delinquent after March 1 of the following year.
After one year, the property is forfeited to the county.
After two years, the property is foreclosed and sold at auction — no matter how small the original debt was.

That means even $200 or $500 in unpaid taxes, if left unresolved for two years, can result in the permanent loss of your home.

This process is codified in the Michigan General Property Tax Act, which grants counties the power to enforce tax collection through nonjudicial foreclosure.

No Minimum Amount Required for Foreclosure

One of the most misunderstood aspects of Michigan's property tax system is that there is no minimum dollar threshold for foreclosure to occur.

Whether the unpaid amount is $5,000 or $500, the county follows the same timeline:

Interest and fees begin accruing as soon as the taxes become delinquent.
After one year, the property is forfeited.
After two years, the property is foreclosed — and the county takes full ownership.
The home is then sold at public auction, and any equity you had in the property is lost.

There are no exceptions based on the dollar amount owed.

How Fees and Penalties Make Small Debts Grow Fast

What starts as a $500 delinquency can quickly balloon into a much larger burden. Michigan counties add the following charges once property taxes are delinquent:

12% annual interest
4% administration fee
$175+ in forfeiture fees
Additional court and publication costs

By the time the property reaches the foreclosure stage, that $500 debt could easily exceed $1,000 or more, making it even harder for struggling homeowners to catch up.

Gloria B. - Clinton Township, Michigan

“Thank you for contacting me. I didn’t know what I was going to do with this house"

What the Courts Have Said

Michigan’s tax foreclosure system has been challenged in state and federal courts — especially when homes are seized and sold for far more than the amount owed.

However, the courts have largely upheld the legality of the system as written under the General Property Tax Act.

In a 2020 decision, the Michigan Supreme Court ruled that counties cannot keep surplus proceeds from tax sales beyond what was owed in taxes and fees.

But this ruling doesn’t stop the foreclosure itself — it only affects what happens afterward.

The foreclosure process can still proceed over any amount of delinquent tax debt, no matter how small.

Real-World Consequences for Michigan Homeowners

Every year, thousands of Michigan residents lose homes over small tax debts. Many are seniors, people on fixed incomes, or heirs who didn’t know the taxes were unpaid. In some cases, the owners believed they were current because they had paid off their mortgage, unaware that property taxes are still due independently.

This is one of the reasons that inherited properties, vacant homes, and older properties are especially vulnerable to tax foreclosure — especially when no one is actively monitoring the bills.

To understand how this process unfolds, and what can be done before it’s too late, visit our guide: Selling Property With Delinquent Taxes in Michigan

When Small Debts Become Big Problems

Even a seemingly minor tax debt should be treated seriously in Michigan.

The state’s tax deed system gives counties broad power to take homes after two years of nonpayment — and does not offer a grace period based on the size of the debt.

If you’ve received notices from your local treasurer or county about unpaid taxes, act now — whether that means paying them, entering a payment plan, or exploring alternatives before the foreclosure clock runs out.

When You’re Facing Foreclosure Over Unpaid Taxes

If you’re in a situation where back taxes are piling up — even if the amount feels small — don’t ignore it.

At Dennis Buys Houses, we help Michigan homeowners resolve tax debt situations quickly, before the county takes the property.

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📚 Frequently Asked Questions About Losing a Home Over Unpaid Property Taxes in Michigan

Can the county really foreclose on my home over $500 in unpaid taxes?
Yes. Under Michigan law, there is no minimum threshold for foreclosure. Even small unpaid amounts — like $500 — can trigger the foreclosure process if left unresolved for two years.

How long do I have to pay back taxes before I lose my home?
Michigan property tax law provides a two-year timeline from the date taxes become delinquent. If taxes are not paid in full by the end of that period, the property is foreclosed and sold by the county.

What happens after my property is foreclosed for unpaid taxes?
Once the foreclosure is finalized, the county takes legal ownership and sells the property at public auction. You lose all rights to the home, and cannot reclaim it after the sale. Learn more in our full guide on selling property with delinquent taxes in Michigan.

Does it matter if the amount owed is small?
No. Michigan law does not make exceptions based on the size of the debt. A $500 delinquency is treated the same as a $5,000 delinquency if it remains unpaid for two years.

Can interest and fees increase the amount I owe?
Yes. Interest, administrative fees, and court costs begin accruing as soon as the taxes are delinquent. A $500 balance can grow to over $1,000 by the time foreclosure occurs.

Is there a way to stop the foreclosure process?
Yes, but only if you act before the foreclosure deadline. You can pay the taxes in full, apply for a hardship extension (if available), or sell the property before the county takes ownership.

What happens if my home is sold for more than the taxes I owed?
Following a 2020 Michigan Supreme Court ruling, counties must return surplus proceeds to the former homeowner. However, this ruling does not stop the foreclosure from occurring in the first place.

Where can I learn more about the tax foreclosure timeline in Michigan?
Our educational guide on selling property with delinquent taxes in Michigan explains the full process, important deadlines, and options for avoiding foreclosure.

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We Help Michigan Families Navigate These Situations Every Day

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At Dennis Buys Houses, we’re not just cash buyers — we’re trusted problem-solvers who help Michigan families find real answers during difficult times.

Since 2004, we've been helping homeowners across Michigan sell their properties quickly and easily—without the stress of agents, repairs, or hidden fees.

We’re a family-owned, local business with deep roots in the community. Over the years, we’ve helped hundreds and hundreds of homeowners in situations just like yours—whether they’re dealing with delinquent property taxes, foreclosure, or simply needing a fresh start.

If you're dealing with a tough family situation and don’t know where to turn, we’re here to help.

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Whether you’re ready to sell or just want to explore your options, we’re here for you. Call us today, and let’s talk about how we can make your situation easier.

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“Mr. Fassett – thank you for working with us to buy my Mom’s home after she passed away. When you mentioned that you would give us an offer within 24 hours and then close quickly I didn’t really believe that we would have the house sold in only 2 weeks. I’m glad I found you.”

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