Michigan's Proposal A rewards staying put. For many long-time owners, that means a cheaper, smaller house can carry a larger tax bill than the one they're leaving. Here's how to run the numbers before you list.
By BIG Real Estate | October 29, 2026
Ask an empty-nester in Troy or Bloomfield why they haven't moved to something smaller, and you'll often hear about mortgage rates. Property taxes are the other half of the answer, and they're less understood. At a Bridge Michigan panel on Oct. 21, Oakland University economist Timothy Hodge argued that Michigan's property-tax system keeps retirees in large homes they'd otherwise leave, tightening supply for younger families (Bridge Michigan, Oct. 28, 2026).
The math behind that argument is simple once you see it. The more years you've owned your home, the bigger it gets. And a bill to change it passed the Michigan House this spring. As of today it sits in the Senate.
How the cap works, and why it resets when you buy
Under Michigan's 1994 Proposal A, your property tax is based on taxable value (TV), not market value. Each year, taxable value can rise by inflation or 5%, whichever is less, until the home is sold (Mich. Const. art. IX, §3; MCL 211.27a). Meanwhile the state equalized value (SEV), roughly half of market value, follows the market.
When a home sells, the cap comes off. In the year after the purchase, the buyer's taxable value resets to the SEV. Anyone who's been through this as a buyer knows it as the "pop-up" or "uncapping." We explain it in detail in our guide to uncapping for Oakland County buyers.
A downsizer is both a seller and a buyer. They give up the capped taxable value they've built over the years and take on a fresh one at today's prices.
How big is the gap in Oakland County?
Across all homes, the gap is large. Oakland County's 2026 Equalization Report puts residential SEV at $93.77 billion and residential taxable value at $67.53 billion. In other words, the typical residential tax base is about 72% of what it would be if every home had just sold (Oakland County 2026 Equalization Report).
For long-time owners, the gap is much bigger than average. Since the mid-1990s, the yearly cap has mostly run 1% to 3%, while home values rose much faster in most years. The 2008–2011 crash complicates the picture. Prices fell so far that most homes' SEV dropped below their taxable value, which pulled taxable value down to the SEV. Since then, values have roughly tripled while taxable values crept up by inflation.
We built a simple model of that history using the S&P CoreLogic Case-Shiller index for metro Detroit (FRED, through July 2026) and the State Tax Commission's yearly inflation caps. It estimates a typical home's 2026 taxable value as a share of its SEV, by the year it was bought:
- Bought before 2012: about 49% (owners who held through the crash reset to about the same point)
- Bought in 2014: about 65%
- Bought in 2017: about 75%
- Bought in 2020: about 81%
- Bought in 2022–2024: 95–99%
- Buying now: 100% in the year after you close
This is an illustration, not an assessment. A metro-wide price index isn't your house, and assessors set values from local sales studies. Still, the model's spread across buyer years is consistent with the county's 72% average. The pattern is the point: anyone who has owned since before 2012 is likely paying tax on roughly half the SEV a new buyer of the same house would pay on.
A worked example: Troy, from $600,000 to $450,000
Take a couple who bought in Troy before 2012 and whose house would sell for about $600,000 today. We use Troy's 2025 certified principal-residence millage for the Troy School District, 36.0430 mills (Oakland County 2025 Apportionment Report). Rates differ by city and school district, and 2026 bills will vary slightly.
Current home ($600,000 market value):
- SEV: about $300,000
- Taxable value (49% of SEV, per the model): about $146,400
- Annual property tax: about $5,280
Smaller home in Troy ($450,000 purchase):
- SEV, and taxable value after uncapping: about $225,000
- Annual property tax from the first full year: about $8,110
The house costs $150,000 less, but the tax bill is about $2,830 a year higher (+54%), or roughly $236 a month. To keep the same tax bill, this couple would need a home worth about $293,000, less than half the value of the home they're selling.
Change one fact and the picture flips. If the same couple had bought their $600,000 house in 2017, their taxable value would be about 75% of SEV, roughly $225,000. The move to a $450,000 home would then be about tax-neutral. The shorter your ownership, the smaller the penalty for downsizing.
These figures are estimates. They show how the system works and aren't a forecast of any specific tax bill. Your assessment notice and your city's tax bills show your actual taxable value, SEV and millage.
What the Legislature is (and isn't) doing about it
On May 20, 2026, the Michigan House passed House Bill 5872 57–46. It would stop transfers of ownership from uncapping taxable value, beginning Dec. 31, 2026 (bill history). A companion, HB 5873, would repeal the 6-mill state education tax (bill history). Both went to the Senate Government Operations Committee on June 2, and neither has seen Senate action since.
Two facts matter for anyone timing a move around this:
- It isn't law. Uncapping still applies to every sale today. The nonpartisan House Fiscal Agency estimated that ending the pop-up would cut property-tax revenue by $200 million to $250 million in the first year, rising to more than $2 billion by FY2035. Schools, counties, cities, townships, the Michigan Municipal League and the Michigan Association of Counties registered opposition (HFA analysis, revised June 11, 2026).
- Uncapping is in the state constitution. Article IX, §3 says that when ownership is "transferred as defined by law," the parcel is assessed at current value. The original package paired the bill with House Joint Resolution T, a constitutional amendment that would need a two-thirds vote in both chambers and approval by voters at a general election (HFA, April 30, 2026). HJR T is still in House committee and isn't on the Nov. 3 ballot.
Our read: a change isn't impossible, but it isn't close. Waiting for one is a bet, not a plan.
Why people stay, according to the research
The Oakland University economist quoted above has studied this before. In a 2015 National Tax Journal paper using Detroit sales data, Hodge, Gary Sands and Mark Skidmore found that owners with lower effective tax rates were less likely to sell. They estimated that the cap lengthened average ownership by 7.5 years (Hodge, Sands & Skidmore, 2015). That study used Detroit data, not Oakland County's, but the incentive works the same way here.
That matters beyond any one household. When long-time owners stay put, fewer family-sized homes reach the market. Oakland County's September inventory was up from a year ago, but mainly because homes were selling more slowly, not because more sellers were listing (our September analysis).
What to do before you list
- Find your taxable value and SEV. Both are on your annual assessment notice (mailed each February) and on your summer and winter tax bills. Divide taxable value by SEV. The lower that ratio, the more a move will raise your tax bill.
- Price the tax on the next home, not the seller's bill. A listing shows the current owner's capped taxes. Estimate your own as about half the price you'd pay, divided by 1,000, times the local principal-residence millage.
- Compare total monthly costs, not purchase prices. Count property tax, insurance, HOA or condo dues, utilities and any mortgage. A $236-a-month tax increase can cancel out much of the savings from a smaller home.
- Look at where you're moving. Rates vary by city and school district, and our November millage guide shows how new levies add to bills.
- File your principal residence exemption on the new home. Without it, you pay up to 18 more mills of school operating tax.
- Ask about relief you may qualify for. Michigan's homestead property tax credit (Form MI-1040CR) and local poverty exemptions can reduce the bill for some lower-income and senior households. Check current eligibility with Michigan Treasury or a tax professional.
- Planning to leave the house to family? Some transfers between family members, such as to a child or grandchild, don't uncap if the home stays a residence (MCL 211.27a(7)(u)). Rules apply, so talk to an estate attorney.
The bottom line
For a long-time Oakland County owner, downsizing usually means a lower price, often a lower mortgage or none, and frequently a higher property tax. That doesn't make moving a mistake. Maintenance, stairs, heating bills and unlocked equity all count. But the tax change is predictable, and you can estimate it before you list rather than discover it on your first winter bill.
If you're weighing a move, we're glad to run the numbers for your actual house and the neighborhoods you're considering.
This article is general information, not tax, legal or financial advice. Property-tax outcomes depend on your specific property, assessment and local rates. Consult your local assessor, a tax professional or an attorney about your situation. Legislative status is as of Oct. 29, 2026.