97% of Detroit homeowners could see property tax cut under new plan

Plan seeks to help homeowners, target vacant property owners

FILE - In this Dec. 2, 2013 file photo, an abandoned house is seen in Brush Park, north of Detroit's downtown. (AP Photo/Carlos Osorio, File) (Carlos Osorio, Copyright 2016 The Associated Press. All rights reserved.)

DETROIT – In an effort to restructure the city’s property tax system, Detroit Mayor Mike Duggan announced Wednesday a new plan that would decrease taxes for homeowners and increase taxes for vacant property owners.

The city is looking to shift the current Detroit property tax system that requires homeowners and small business owners to pay higher property taxes than owners of blighted and vacant properties that don’t have any plans for development.

“The system is so broken that one speculator in Detroit owns 261 parcels of vacant land totaling 22 acres across the entire city and only pays $6,542 in taxes, while a single Detroit homeowner with a $200,000 house who puts time and energy into maintaining their property pays $6,800 in taxes,” a press release from Duggan’s office read Wednesday.

The new Land Value Tax Plan announced on May 31 would create tax reductions for 97% of homeowners and 70% of small business owners, offering what the city calls much-needed relief. In comparison, the “median vacant lot” would see a property tax increase of 185%.

“We have a property tax system that punishes anyone that builds in Detroit and strongly rewards anyone who owns vacant land and completely neglects it,” Detroit Mayor Mike Duggan said. “Our land has value and it’s time we tax it that way and stop incentivizing blight.”

The decreased tax rates for homeowners and small business owners would automatically apply to all neighborhoods within the city, officials said. There is no application required, and the plan does not expire.

While the goal is to help residents and business owners in the city, the new tax plan would also provide a significant revenue bump for the city. The money would “make up the revenue needed to keep city operations within a balanced budget,” officials said.

The plan must be approved by the Michigan Legislature before moving forward. The mayor’s office says the plan could appear on the Detroit ballot in February. If voters approve the plan, it would take effect in phases over a three-year period starting in 2025.

A deeper look inside the plan

Below are more details about how the new tax plan would specifically affect different groups, as written by Duggan’s office:


Homeowners are the biggest winners under the Land Value Tax Plan. Ninety-seven percent of Detroit homeowners would see a reduction in their property taxes while the remaining 3% would see no change at all. The Land Value Tax Plan provides more relief than the NEZ Homestead exemption. The median homeowner will save 27% on their tax bills. The average $50,000 home in Detroit will see a $450 tax cut, while a $100,000 home will see a tax cut of $900.

Side lots

The city of Detroit has sold more than 20,000 side lots to homeowners all over the city. Under the Land Value Tax Plan, the median tax on a side lot will go up by about $40. However, for homeowners who own less than four side lots, the decrease in property taxes on the house will more than offset the increase in the taxes on the side lots.

Vacant lots

The city of Detroit spends $5 million dollars every year cutting grass and clearing illegal dumping on vacant lots, while the owners pay a fraction of that in taxes, approximately $30 per vacant lot. The Land Value Tax Plan will increase taxes on the median vacant lot by 185%. This move will shift the burden of blight from Detroiters to the land speculators who have profited from Detroit’s tax system for far too long.

Scrap yards

There are nearly 900 scrap yards throughout the city of Detroit. Since 2012, there have been 20 new properly permitted scrap yards and dozens more that don’t have permits. The city has spent nearly $2 million hiring staff and personnel to crack down on scrap yard complaints while scrap yard owners pay a total of less than $700,000 every year. The Land Value Tax Plan will increase the median tax bill for scrap yards by 100%.


The median tax on warehouses will go up 10%, however 30% of warehouses will see a reduction in property taxes–rewarding those who efficiently use their space and maintain their structures.

New and expanded developments

The land value tax plan will also make building, rehabbing, and expanding multifamily housing more affordable. Multifamily housing will benefit from a median savings of 20%. New housing developments will be easier to finance and less expensive to operate. The tax savings will help spur more high-quality, affordable housing throughout Detroit.

Small businesses

Under the Mayor’s Land Value Tax Plan, 70% of small businesses can expect to see a reduction in their property taxes. A typical retail business will see 5% in savings, while others may see an increase based on the size of their parking lot and the location of their business. While the Land Value Tax Plan will increase taxes on vacant, unproductive land, the city of Detroit is working on a plan to protect existing businesses and developments through a tax credit system. Properties that meet a certain development threshold will be capped at a maximum increase, and businesses that meet zoning requirements for parking will be protected from increases on those parking spaces.

Click here to learn more about the plan on the city’s website.

About the Author:

Cassidy Johncox is a senior digital news editor covering stories across the spectrum, with a special focus on politics and community issues.