How Do Property Taxes Work for Inherited Homes?

Understanding Property Taxes After Inheriting a Home in Michigan

Inheriting a home can bring both emotional and financial responsibilities.

One of the most important — and often confusing — aspects is dealing with property taxes.

Whether you're planning to keep the home, rent it out, or sell it, understanding how property taxes apply to inherited property in Michigan can help you avoid unexpected costs and legal trouble.

This guide explains how property taxes are assessed, what deadlines matter, and what happens if taxes go unpaid — especially as they relate to Michigan’s General Property Tax Act and its foreclosure rules.

Do You Owe Property Taxes Immediately After Inheriting a Home?

Yes — in most cases, the new owner of an inherited home becomes responsible for property taxes as soon as the title transfers. If the property was already delinquent on taxes at the time of the previous owner’s death, the tax debt transfers along with ownership.

Keep in mind:

There is no "inheritance tax" on real estate in Michigan, but regular property taxes still apply.
If multiple heirs inherit the home together, they all share legal responsibility for the taxes.
The estate may cover unpaid taxes before transferring the property, but that doesn’t always happen automatically.

How Is the Property’s Taxable Value Determined?

When a home is inherited, the taxable value usually resets based on current market conditions. This is known as an "uncapping" of the taxable value — a feature of Michigan’s property tax system under Proposal A.

Here’s how it works:

Before inheritance: The previous owner's taxable value was capped, often well below market value.
After inheritance: The taxable value is uncapped and adjusted to the home's State Equalized Value (SEV), which is usually 50% of the market value.
This means your first property tax bill as a new owner may be significantly higher than what the deceased owner paid.

The General Property Tax Act governs this process and ensures consistent reassessments across counties.

What If the Home Was Already Behind on Taxes?

If the deceased owner owed back taxes, that debt stays with the property — not the person. When you inherit the home, you inherit the responsibility for those taxes unless they are paid from the estate before the title transfer.

Unpaid property taxes in Michigan follow a strict timeline:

After one year, the property is forfeited to the county.
After two years, it is foreclosed and sold at auction.

If you’re inheriting a home that’s already in this process, you’ll need to act quickly. Learn more about how this works on our guide: Selling Property With Delinquent Taxes in Michigan.

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Can You Get an Exemption or Reduction on Property Taxes?

In some cases, yes. While inheriting a home does not automatically qualify you for a reduction, there are exemptions you may be eligible for:

Principal Residence Exemption (PRE): If you move into the home and make it your primary residence.
Poverty exemption: If you meet local income and asset thresholds.
Veterans or senior exemptions: If you or a co-owner qualify based on military service or age.
Non-profit or religious use exemptions: If the home is donated or repurposed accordingly.

You must apply for exemptions through your local assessor’s office — they are not automatic and must be renewed annually in some cases.

What Should You Do If You Don’t Want the Home?

Many heirs find themselves responsible for a property they don’t want or can’t afford. If this is the case, your options include:

Selling the property on the market
Selling it to another heir
Declining the inheritance (if you haven’t taken legal ownership yet)
Selling to an investor, especially if the home is distressed or has tax debt

Each of these choices has different implications for tax liability and timing. The key is acting early, especially if tax deadlines are approaching.

Why Inherited Homes Often Become Tax Delinquent

Inherited homes are one of the most common types of properties that fall behind on taxes in Michigan. Here’s why:

Heirs are often unaware of existing tax debt.
Paperwork delays during probate stall ownership transfers and payments.
No one wants to maintain or pay for the property.
The home is vacant or in poor condition, making it hard to sell quickly.

This is why it’s so important to stay ahead of deadlines and understand your legal obligations as the new property owner. The General Property Tax Act does not pause or reset due to probate or grief — the tax clock keeps ticking.

When You're Ready to Explore Options

If you’ve inherited a home in Michigan and you’re struggling to keep up with the taxes — or just want to resolve the situation quickly — we can help.

At Dennis Buys Houses, we work with heirs to simplify complex situations, even when taxes are owed or the house needs repairs.

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📚 Frequently Asked Questions About Property Taxes and Inherited Homes in Michigan

Do I have to pay property taxes right after inheriting a home in Michigan?
Yes. As soon as the home transfers to your name, you become responsible for any current and future property taxes — including any unpaid taxes from before the inheritance.

Can I inherit a home in Michigan that already has delinquent property taxes?
Yes, and it’s common. If the former owner was behind on taxes, that debt transfers with the property. You can learn more about what to do in this situation on our page about selling property with delinquent taxes in Michigan.

Will my property taxes go up after I inherit a home?
Usually, yes. Michigan law allows for the taxable value of the property to be “uncapped” when ownership changes. This means the taxes could increase significantly based on current market value.

How is the property’s new taxable value calculated?
The taxable value is typically adjusted to the State Equalized Value (SEV), which reflects about 50% of the fair market value. This reassessment happens automatically after the transfer of ownership, as outlined in the Michigan General Property Tax Act.

Can multiple heirs be held responsible for unpaid property taxes?
Yes. If multiple people inherit the home, all of them share legal responsibility for ensuring taxes are paid. This can create complications if heirs don’t agree on what to do with the property.

Are there any exemptions available for inherited property taxes?
Possibly. You may qualify for the Principal Residence Exemption (PRE) if you live in the home, or for other exemptions based on income, age, or military status. These must be applied for through your local tax assessor’s office.

What happens if we can’t afford the taxes on an inherited property?
If the taxes aren’t paid, the home may eventually be foreclosed by the county under Michigan’s General Property Tax Act. You can avoid this outcome by selling the property or paying the back taxes before the foreclosure deadline. Find more info here: selling property with delinquent taxes in Michigan.

Does the probate process delay property tax deadlines?
No. Property taxes continue to accrue regardless of probate. If the estate takes months or years to settle, unpaid taxes and interest can pile up. Acting early is key to avoiding penalties.

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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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