Key Takeaways

Key Takeaways Ann Arbor property taxes have jumped 15-20% in some neighborhoods due to rapid appreciation, creating payment crises for long-term homeowners Michigan's tax foreclosure process takes 3-4 years, but homeowners lose all equity once the county takes the property You have options to save your equity even with delinquent taxes - payment plans, hardship deferrals, or selling before foreclosure Tax deed sales in Washtenaw County happen annually in September, and properties often sell for just the tax amount owed

Ann Arbor Property Tax Problems: What Happens When You Can't Pay and How to Save Your Equity

Look, I'm going to be straight with you. Ann Arbor's red-hot real estate market has been great for property values, but it's created a hidden crisis that nobody wants to talk about. While everyone's celebrating home prices that have jumped 18% in the past year alone, some longtime homeowners are getting crushed by property tax bills they simply cannot afford.

I had a homeowner call me last month - lived in the same house near the University of Michigan for 25 years. Her property taxes went from $4,200 to $6,800 in just two years because her modest ranch home is now worth $485,000. She's on a fixed income and can't come up with an extra $200+ per month. She's not alone.

The Reality of Ann Arbor's Tax Burden

Ann Arbor's current median home price sits at $465,000 as of February 2026, up dramatically from pre-pandemic levels. The city's millage rate of 13.43 mills means homeowners pay roughly $13.43 per $1,000 of assessed value. On that median-priced home, you're looking at annual property taxes around $6,200 - and that's before any special assessments.

Here's what's happening: Properties are being reassessed based on these inflated market values, and long-term residents who bought their homes for $150,000 fifteen years ago are now facing tax bills based on assessments of $400,000 or more. It's a financial shock that many simply cannot absorb.

How Michigan's Tax Foreclosure Process Works

When you can't pay your property taxes in Michigan, here's exactly what happens - and I've seen this process play out hundreds of times:

Year 1 - Delinquency: Your taxes become delinquent on March 1st if unpaid. Interest and penalties start adding up immediately. In Washtenaw County, you're looking at 1% interest per month plus additional fees.

Year 2 - Tax Lien: The county places a tax lien on your property. You still own the home, but now you owe the back taxes plus accumulated interest and fees. This is when many people panic and think it's too late - but it's not.

Year 3 - Forfeiture: If taxes remain unpaid, your property "forfeits" to the county. You still have redemption rights, but the clock is really ticking now.

Year 4 - Foreclosure: This is the point of no return. Washtenaw County can foreclose on your property and sell it at a tax deed sale. Once this happens, you lose everything - all your equity, gone.

Washtenaw County's Tax Deed Sales

Every September, Washtenaw County holds its annual tax deed sale. I've attended these sales, and let me tell you, it's heartbreaking. Properties that families lived in for decades get sold for whatever the back taxes are - sometimes as little as $8,000 to $15,000 for homes worth hundreds of thousands.

The county doesn't care about your equity. They just want their tax money. If your home is worth $400,000 and you owe $12,000 in back taxes, they'll sell it for $12,000 and keep the difference. That's $388,000 of your equity that just vanished.

In 2025, Washtenaw County foreclosed on 127 properties. The average sale price at the tax deed auction was just $14,200, while the average assessed value of those same properties was $185,000. Do the math - that's a lot of lost equity.

Your Options Before It's Too Late

Whether you work with HOMESELL USA or someone else, here's what you need to know about protecting yourself:

Payment Plans and Hardship Programs

Washtenaw County offers payment plans for delinquent taxes. You can sometimes spread the payments over 12-24 months. They also have a hardship deferral program for seniors and disabled homeowners that can delay collection until the property is sold or transferred.

The key is to contact the Washtenaw County Treasurer's office BEFORE your property forfeits. Once it hits that third year, your options get very limited very quickly.

Selling Before Foreclosure

Here's something most people don't realize - you can sell your house even with delinquent property taxes. The back taxes just get paid out of the sale proceeds at closing. If you've got equity in your home (and in Ann Arbor's market, you probably do), selling might be your best option to preserve that wealth.

I work with homeowners in this exact situation all the time through HOMESELL USA. We can close fast, pay off the back taxes, and get you the equity you deserve instead of letting the county take it for pennies on the dollar.

The Equity Rescue Strategy

Let's say you owe $18,000 in back taxes and your Ann Arbor home is worth $380,000. Traditional real estate might take 60-90 days to sell, and you might not have that time. That's where companies like HOMESELL USA come in. We can close in 2-3 weeks, pay off the tax debt, and put the remaining equity in your pocket - often $300,000+ that would otherwise be lost to tax foreclosure.

Real Stories from Ann Arbor

I worked with a widow in the Burns Park neighborhood last year. Her husband passed, she got behind on taxes, and owed about $22,000 by the time she called me. Her little bungalow was worth $425,000, but she was weeks away from losing it to tax foreclosure.

We closed in 18 days, paid off the tax debt, covered her closing costs, and she walked away with $367,000. Compare that to what would have happened at the county tax sale - they would have sold her house for the $22,000 in back taxes and she'd have gotten nothing.

Warning Signs You're in Trouble

Don't wait until you're in crisis mode. Here are the red flags:

• You're borrowing money or using credit cards to pay property taxes
• You've missed one or more tax payments
• You've received notices from the Washtenaw County Treasurer
• Your property taxes have increased dramatically due to reassessment
• You're considering a reverse mortgage just to pay taxes

Taking Action

Look, I get it. Nobody wants to think about losing their home to taxes. But ignoring the problem won't make it go away, and in Michigan's tax foreclosure system, time is not on your side.

The good news is you have options, but only if you act while you still have time. Whether that's setting up a payment plan with the county, applying for hardship deferral, or selling your home to preserve your equity, the key is to do something before that foreclosure hammer falls.

At HOMESELL USA, we've helped dozens of Ann Arbor homeowners navigate exactly this situation. We understand Michigan's tax laws, we know the local market, and we can move fast when time is running short. But more importantly, we can help you understand all your options - not just selling to us.

Don't let the county take your life's wealth for the cost of a used car. If you're struggling with property taxes in Ann Arbor, give Uncle Charles a call. No pressure, no judgment - just straight answers about your situation and what you can do to protect yourself.

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