Sell an Inherited House in Michigan

Does Michigan have an inheritance tax on a house?

No. Michigan does not charge an inheritance tax or a state estate tax, so most families owe nothing to the state when they inherit and sell a home. At the federal level, the estate tax only applies to estates worth more than 15 million dollars in 2026, which leaves out nearly every inherited house in Michigan.

Inherited property also receives a stepped-up basis, meaning its cost basis resets to the fair market value on the date of the previous owner’s passing. If you sell at or near that value, your capital gains can be small or even zero.

Great Lakes House Buyer is a home buyer, not a tax or legal advisor. Confirm your specific situation with a licensed CPA or estate attorney before you sell.

Will inheriting a house raise the property taxes in Michigan?

It depends on who you inherited from and how the home is used. Under Proposal A, transferring ownership normally uncaps a property’s taxable value, resetting it toward market value the year after the transfer, which can raise the tax bill sharply.

Michigan created an important exception with Public Act 310 of 2014. A transfer of residential property to the previous owner’s close relatives, including a spouse, parent, child, sibling, grandchild, or adopted child, generally does not uncap the taxable value, as long as the home is not used for a commercial purpose afterward. So inheriting a parent’s or grandparent’s home and keeping it residential often preserves the lower capped taxes.

Two things still push costs up. If the home is no longer anyone’s primary residence, it loses the Principal Residence Exemption and is taxed at a higher non-homestead rate. And renting it out can put the relative exemption at risk. For many heirs, those rising carrying costs are a big reason to sell. When you do sell, any uncapping that follows applies to the buyer, not to you.

Property tax rules are nuanced and change over time. This is general information, not tax advice. Check with your local assessor or an attorney about your specific property.

What is a Lady Bird deed, and does it affect selling?

A Lady Bird deed, formally an enhanced life estate deed, is an estate planning tool that Michigan recognizes. It lets a property pass automatically to a named beneficiary when the owner dies, without going through probate.

If the home you are set to receive was set up with a valid Lady Bird deed, you may already own it outright once the previous owner passes, which often means you can sell right away without waiting on the probate court. If there was no Lady Bird deed, trust, or joint ownership in place, the home usually passes through probate first. Either way, we can work with your situation and your timeline.