Once a property’s taxable value has been calculated, the
appropriate tax rate — or millage — must be determined. This rate will depend on the property’s tax category.
Recall that for personal property, this category is one of five
classifications: residential, agricultural, commercial, industrial or utility
property.[xxv] Similarly, for real property, the category is
one of six classifications: residential, agricultural, industrial, commercial,
timber cutover and developmental property.
Real property is classified as either "homestead" or "nonhomestead."
A "homestead" property is a residential parcel that is a taxpayer’s primary
dwelling within the state;[xxvi] the category does not include Michiganians’ secondary in-state residences or "summer cottages." Homestead property also includes some qualified agricultural properties. "Nonhomestead" properties, in contrast, are those that do not qualify as homesteads.
Tax rates for real property and personal property are measured
in units called "mills." One mill equals one-tenth of one cent per dollar of
taxable value, or equivalently, one dollar per thousand dollars of taxable
value. In decimals, 1 mill would be expressed as 0.001.
For example, nonhomestead property is typically subject to a
maximum local school operating property tax of 18 mills. Local millage rates, or the number of mills applied to a property, are determined by property type and the purpose of the tax. The various state and local millage rates are discussed beginning with"Local Property Taxes by Type," and in subsequent sections dealing with state taxes for education.
[xxvi] Excepting military personnel, if a Michigan property owner has filed an income tax return as a resident in another state, that person — for example, a civilian Michigan summer home owner who does not permanently reside in Michigan — is not eligible for the homestead exemption; see MCL § 211.7cc(3)(d).