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. Understanding the distinction between assessed value and market value is essential here, because SEV is not always an accurate reflection of what the property would sell for. 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. For investors holding triple-net lease properties, a post-sale reassessment flows straight through to the tenant and can destabilize the lease economics overnight. 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 arm's-length sales do trigger uncapping, but Michigan law carves out a long list of exceptions that can preserve the capped taxable value. Certain transfers between closely related parties, transfers to trusts under specific conditions, transfers between spouses, and several statutory exemptions may not trigger uncapping even though the deed changes hands. Each situation turns on the specific facts — the structure of the transaction, the relationship between the parties, and the language of the transfer documents all matter. It's worth having an expert review whether uncapping was correctly applied to your property, because an erroneous uncapping determination can be corrected. Be sure to check all property tax deadlines so you don't miss your filing window while we sort it out.
Not easily. Michigan law treats transfers of more than 50% of an entity's ownership interest as a transfer of ownership for uncapping purposes, which means a simple LLC membership flip is not the loophole some buyers hope it is. Restructuring ownership solely to avoid uncapping is both risky and closely scrutinized by assessors, and penalties for failure to report a transfer of ownership can compound the problem. The better approach is to ensure your post-uncapping assessment accurately reflects market value — and to appeal through the Michigan Tax Tribunal if it doesn't. In most cases, a successful appeal produces far more lasting value than an aggressive transfer-of-ownership argument. Request a free property tax review to have your post-uncapping assessment evaluated.
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 particularly common in high-value markets like Wayne County and Oakland County. The 2026 Michigan assessment increases compound the uncapping mechanics further by pushing SEVs higher across the board, which means the value your taxable value uncaps to is itself inflated this cycle. 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, and post-purchase appeals are among the most successful cases we handle. 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. The purchase price itself is often the strongest single piece of evidence in a post-uncapping appeal, because an arm's-length transaction is the clearest signal of true cash value. A successful appeal reduces the SEV that your taxable value uncaps to, which means savings in your first year of ownership and a lower baseline for every year after. Filing with the Michigan Tax Tribunal before May 31 is the key step.
Uncapping is the mechanism that resets the Proposal A cap when a property transfers. Under Proposal A, your taxable value can only grow by the lesser of 5% or inflation each year — but a transfer of ownership breaks that protection and snaps the taxable value up to the full SEV. The new owner then inherits a much higher tax base, and the Proposal A cap begins running again from that new, higher starting point. That dynamic makes the first year after a purchase the single most important year to challenge your assessment, because every dollar you save on the SEV becomes the new capped baseline for years to come. Understanding both mechanisms is essential for any commercial buyer entering a Michigan market.
Fast. The Michigan Tax Tribunal filing deadline for commercial properties is May 31 of the tax year, and that deadline does not bend for buyers who are still settling into a new property. If you close in late winter or early spring, you may have only weeks to review the assessment, gather income and comparable-sales evidence, and prepare a petition. Even if you close earlier in the year, assessors often don't issue the uncapping notice until well after the transfer, which shortens the effective window further. Our free review is built for exactly this situation — we can tell you within a few days whether your new Michigan property has a strong appeal, and we handle the filing on your behalf before the deadline.
