Inflation is resulting in greater summer time property taxes

STERLING HEIGHTS, Mich. (WXYZ) — As summer taxes begin to arrive this month, some homeowners like Greg Karavidas may be surprised at what they see.

“I opened the mail on Saturday and it was $12,306, which kind of threw me for a loop,” Karavidas said.

“What was going through your mind when you saw that? Did you think it must be a typo or something?” 7 Action News reporter Brett Kast asked.

“Yeah, that’s what I thought,” Karavidas responded.

Karavidas bought his new home in Sterling Heights last year and was expecting his bill to be about $9,000. But instead, it was $3,000 higher.

“It was unexpected,” Karavidas said. “If I knew that, I may not even have bought the house. Three thousand dollars (more) is substantial.”

The increase is due in part to inflation, which the state uses to calculate taxable value on homes. This year, the increase in that value, called the Inflation Rate Multiplier, was capped at 3.3%, the highest in over a decade.

“Going back to 2009, we’ve had a very low rate of inflation, so most homeowners did not notice a huge increase,” said Steve Meyers, a real estate agent with RE/MAX Metropolitan.

Meyers also has a website with real estate advice, and warned of this tax increase with a column in the Oakland Press back in January.

Meyers says summer tax bills will likely surprise some homeowners, especially recent buyers like Karavidas. For homes bought in the previous year, the increase in taxable value is uncapped, meaning Karavidas’s taxes increased are much more than the average homeowner.

“For that buyer, if they’re just looking at what that current seller is paying on taxes, they’re going to get a rude surprise and the taxes could be double or more when they get their tax bills as a new homeowner,” Meyers said.

No matter the level of inflation, state law caps the year to year increase at 5%, but with inflation rising, next year could certainly hit that maximum.

“Next year, it’s going to be even worse,” Meyers said.