You can view an updated post on this topic by clicking HERE!
UPDATE: On December 22nd, 2010, Governor Granholm vetoed MAR-supported legislation aimed at getting the housing market moving. Senate bill 77, which passed both the House and Senate in the last days of the 2010 session, allowed foreclosed properties to retain their principal residence exemption for a period of up to 3 years.
Look for this to be reintroduced sometime in early 2011.
Very interesting news was announced yesterday as new housing legislation unanimously passed in the Michigan Senate and now moves to the house for a vote. The topic – Homestead property taxes and the principal residence exemption deadline could be extended from May 1st to October 1st!
What does this mean to home buyers and sellers in Northern Michigan?
Currently, if you purchase a home in Michigan after May 1st and the house is currently not considered a “primary residence”the property taxes for the entire year will be based on the non-homestead tax rate which can be up to 18 mills higher. This would extend the deadline to October 1st which is great news for home buyers who purchase throughout the summer and intend to use the house as their primary residence if the seller is not currently taking advantage of the principal homestead exemption. This is also very beneficial to some sellers, especially within our Traverse City region (Grand Traverse County & Leelanau County) because of the large amount of second homes on the market. If you are selling a non primary residence home, currently you must sell that home before May 1st to a buyer who will file the principal residence exemption form in order for you to prorate your tax portion at a lower millage rate for the year of the sale. If they extend the date to October or November it could potentially reduce your tax bill significantly for the entire year, even if you sell in late summer/early fall. You can read the full press release below. Please let us know if you have any additional questions!
-Jonathan Oltersdorf
http://www.oltersdor.com/
Senate Bill 77, sponsored by Senator Jud Gilbert (R – Algonac) unanimously passed the Michigan Senate today with a vote of 36-0 and now moves to the House of Representatives for consideration. This legislation would provide for an additional “Principal Residence” filing date of October 1st. It should be noted that an amendment has been added to the legislation to move the deadline from October 1st to November 1st for 2010 only so that homebuyers can take advantage of this taxpayer friendly legislation this year.
Under current law, homeowners may file a principal residence exemption on their primary home in Michigan. This exemption provides significant tax relief to those citizens that choose to call this state “home.” In order to claim this exemption, one must file the principal residence affidavit with their local government by May 1st. Buyers purchasing homes after the May 1st deadline, are hit with up to an additional 18 mills of non-homestead property taxes until the following year. This additional property tax burden is standing in the way of new homeownership and otherwise taxing those people that have declared Michigan their home, though they purchased after the deadline.
This legislation has become particularly important since “non principal residence” properties, specifically foreclosures, have flooded Michigan’s real estate market in recent years. The current situation prices buyers out of homes by forcing them to qualify for a mortgage at the higher tax rate. Those buyers that are able to purchase after May 1st are consequently stuck with a significant tax burden for the remainder of the year despite making that new purchase their principal residence. This bill would alleviate some of that pressure by creating a second filing deadline later in the year.
We remain cautiously optimistic regarding the passage of this legislation as there are a finite number of session days left this legislative session. The MAR Public Policy staff will continue to meet with the members of the Michigan House to express the importance of making this tax payer friendly legislation a priority.
Copyright Michigan Association of REALTORS®. Reprinted with permission.