HOW UNCAPPING WORKS
What Causes Your Property Taxes to Uncap
Direct Property Sale
The most common trigger. When a commercial property changes hands through a standard sale, the taxable value resets to the full State Equalized Value (SEV).
Entity Transfer (>50% Ownership)
If more than 50% of an ownership entity changes hands, Michigan treats it as a transfer of ownership — triggering uncapping even without a traditional sale.
Land Contract Transfers
Properties transferred via land contract are also subject to uncapping when the buyer takes possession and beneficial ownership transfers.
Certain Lease Arrangements
Long-term leases with purchase options or leases that transfer substantially all ownership benefits may also trigger an uncapping event.
PROPOSAL A EXPLAINED
How Michigan's Tax Cap Works — and How It Breaks
Under Michigan's Proposal A (1994), your property's taxable value is capped — it can only increase by the lesser of 5% or the rate of inflation each year. This cap protects owners from sudden tax spikes as property values rise.
But here's the catch: when a property sells, the cap resets. The taxable value "uncaps" to the full State Equalized Value (SEV), which is 50% of the assessor's estimate of market value. If the property has been held for years with a low capped value, the jump can be dramatic.
For commercial buyers, this means your first tax bill after purchase can be significantly higher than what the previous owner paid — sometimes 2x to 3x more. That's why reviewing your post-purchase assessment is critical, and why appealing your property tax assessment after uncapping can deliver substantial savings.
YOUR OPTIONS
What to Do When Your Michigan Taxes Uncap
Review the new assessment immediately
Verify the uncapping was triggered correctly
Compare SEV to actual market value
File an appeal with the Michigan Tax Tribunal before May 31
Consult a property tax appeal specialist
UNCAPPING CASE RESULTS
Real Savings After Uncapping
Real Estate Syndicate
Wayne & Macomb Counties, MI
/ Annual Savings
Shopping Centers
Wayne, Oakland, Genesee Counties, MI
/ Annual Savings
Banking
Grand Traverse & Oakland Counties, MI
/ Annual Savings
Most standard sales do trigger uncapping. However, certain transfers between closely related parties, transfers to trusts under specific conditions, and some other exemptions may not trigger uncapping. Each situation is different, and it's worth having an expert review whether uncapping was correctly applied to your property.
Not easily. Michigan law treats transfers of more than 50% of an entity's ownership interest as a transfer of ownership for uncapping purposes. Restructuring ownership solely to avoid uncapping is both risky and closely scrutinized by assessors. The better approach is to ensure your post-uncapping assessment accurately reflects market value — and to appeal if it doesn't.
It depends on the gap between the capped taxable value and the full SEV. Properties held for a long time with significant appreciation may see taxable value double or triple after uncapping. The longer the property was held and the more values appreciated, the larger the potential increase. This is exactly why a post-purchase assessment review is critical.
Absolutely. Even after uncapping, you have the right to appeal the assessed value (SEV) if it exceeds your property's actual market value. Many buyers find that the assessor's SEV is inflated — especially for commercial properties where vacancy, condition, or income don't match the assessor's assumptions. Filing with the Michigan Tax Tribunal before May 31 is the key step.
