Michigan Court of Appeals Decision: Renting Your Primary Home

Michigan Court of Appeals Decision: Renting Your Primary Home

Leelanau County Vacation Rental.jpg

Can I rent out my primary home as a short term rental and still retain my principal residence exemption (PRE)?

In late 2017 there was a ruling by the Michigan Court of Appeals that could potentially impact many short term vacation property rental owners in Leelanau County. The petitioner was the owner of a vacation property in Boyne City who was denied their Principal Residence Exemption (PRE) by the Michigan Tax Tribunal because they rented out their primary home for more than 14 days during each year. The petitioner provided proof that he occupied the house for the majority of the year as the primary residence, was registered to vote at the address, and it was the address listed on his driver’s license and tax returns. He also stated that he had not claimed a principal residence in another state.  

In the appeal, RENTSCHLER v. TOWNSHIP OF MELROSE the Michigan Court of Appeals decision was the following:

“…For all these reasons, we conclude that the PRE guideline provision relied on by the Tribunal is erroneous and inconsistent with the GPTA. Renting one's home for more than 14 days does not disqualify a homeowner from the PRE. Accordingly, accepting the Tribunal's factual findings, we conclude that defendant has satisfied the legal requirements to qualify for the PRE. We therefore reverse the Tribunal's decision and remand for entry of a judgement granting petitioner's request for PRE for the 2013, 2014, and 2015 tax years. We do not retain jurisdiction.”

The Michigan Court of Appeals decision did not specify how many rental days is too many to qualify for the Principal Residence Exemption so it is likely there will be additional controversy and/or court cases dealing with this issue.

Here are a few helpful links dealing with this topic:

 http://caselaw.findlaw.com/mi-court-of-appeals/1881127.html

http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20171128_C336333_21_336333.OPN.PDF

http://www.fraserlawfirm.com/blog/2017/12/michigans-principal-residence-exemption-and-short-term-rentals/

https://www.wnj.com/Blogs/Appellate/December-2017/COA-A-Petitioner-is-entitled-to-a-Principal-Resid

Disclaimer: I am not an attorney. I recommend that you contact an experienced real estate attorney for further explanation on this Michigan Court of Appeals ruling and how it could potentially impact your real estate.

Jonathan Oltersdorf, Oltersdorf Realty, LLC
Phone: 231-271-7777
E-mail: jonathan@oltersdorf.com

Current Mortgage Rates - January 2018

Annual Average 30 Year Fixed-Rate Mortgage Rates

The annual average 30 year fixed mortgage rates increased slightly in 2017 up to an annual average of 3.99%. Above you will find the historical monthly average rate dating back to 2006.

8440 S Lakeview Road, Traverse City - SOLD

SOLD LAKE LEELANAU WATERFRONT PARCEL

LISTED & SOLD by Oltersdorf Realty LLC on 1/12/2018
8440 S Lakeview Road, Traverse City, MI – 46' of Private Frontage on South Lake Leelanau
Asking Price: $200,000

Situated in a fantastic location on South Lake Leelanau this vacant waterfront parcel offers 46' of private direct frontage with western facing sunset views!

Parcel C E Phillip Street, Lake Leelanau - SOLD

SOLD LAKE LEELANAU VACANT PARCEL

LISTED & SOLD by Oltersdorf Realty LLC on 1/5/2018
Parcel C E Phillip Street, Lake Leelanau, MI – Lake Leelanau Commercial Parcel
Asking Price: $99,000

Vacant Lake Leelanau commercial parcel in a very high traffic location just west of the M-204 & Eagle Highway / S Lake Leelanau Dr intersection with access off of M-204. This 0.606 acre wooded parcel offers 115’+ of road frontage on M-204 and is situated in a fantastic central Leelanau County location close to other popular businesses and a public boat launch. Available utilities include natural gas, private well, and municipal sewer connection. C-2 zoning allows potential for a variety of uses including (but not limited to) an automobile car wash, offices and showrooms, wholesale business, service establishment, veterinarian, restaurant, or single family use!

1497 S Nanagosa Trail, Suttons Bay – SOLD

SOLD SUTTONS BAY WATERFRONT HOME

LISTED & SOLD by Oltersdorf Realty LLC on 12/28/2017
1497 S Nanagosa Trail, Suttons Bay, MI – Home with 200’ on West Grand Traverse Bay
Asking Price: $710,000

Located on a quiet low traffic paved private drive this cedar sided home offers 200’ of private West Bay water frontage on an estate sized 1.28 acre parcel! Home features include 2,782+ finished sq ft, 4 bedrooms, 3.5 baths, an open main floor great room with expansive bay views, two story cathedral ceilings, gas fireplace, main floor master bedroom suite with a walk-in tiled shower and walk-in closet, hardwood and ceramic tile flooring, granite kitchen and bath countertops, finished walkout lower level, and a 2 car attached garage! The exterior enjoys multilevel waterside decks, sandy beach area, fenced 1425 sq ft sport/basketball court, shed, paved driveway, and a Generac generator!

The Tax Cuts and Jobs Act – How does it affect homeowners?

The Tax Cuts and Jobs Act – How does it affect homeowners?

Here are the major provisions that will affect current and prospective homeowners. All individual provisions are generally effective after December 31, 2017 for the 2018 tax filing year and expire on December 31, 2025 unless otherwise noted. The provisions do not affect tax filings for 2017 unless noted.

Deduction for State and Local Property Taxes

  • The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
  • The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.

Mortgage Interest Deduction

  • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
  • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

Moving Expenses

  • The final bill repeals moving expense deduction and exclusion, except for members of the Armed Forces.


Source: https://www.nar.realtor/taxes/tax-reform/the-tax-cuts-and-jobs-act-what-it-means-for-homeowners-and-real-estate-professionals?tp=i-H43-Bb-1Jq-1b4c2-1p-C5u1-1c-1Z75h-1DcSmD&om_rid=23612206%20&Om_ntype=NARstandard&om_mid=5074#!#Current%20and%20Prospective%20Homeowners Copyright National Association of REALTORS®. Reprinted with permission.

1591 S Montmorency Ln, Suttons Bay - SOLD

SOLD SUTTONS BAY VACANT PARCEL

LISTED & SOLD by Oltersdorf Realty LLC on 12/12/2017
1591 S Montmorency Ln, Suttons Bay, MI – 2.00 Acre Wooded Parcel
Asking Price: $36,750

Situated in a quiet cul-de-sac location this 2 acre wooded building site is located within “The Orchards” and offers underground utilities including electric, natural gas, cable, and paved county maintained roads. Reasonable restrictions in place including a minimum of 1,500 sq ft for a single floor home and 1,800 sq ft for a multiple story home, one outbuilding is allowed.

12332 E Lovers Lane, Suttons Bay – SOLD

SOLD SUTTONS BAY HOME

SOLD by Oltersdorf Realty LLC on 11-27-17
12332 E Lovers Lane, Suttons Bay, MI - House Close To Water Access
Asking Price: $161,000

Affordable home in a fantastic neighborhood within 500’ of a township waterfront park on West Grand Traverse Bay! This 3 bedroom, 2 bath home features 1800+ finished sq ft, 2 car garage, and a private quiet location on a county maintained road on Stony Point Peninsula in Suttons Bay Township!

10011 N Old Farm Road, Northport - SOLD

SOLD NORTHPORT WATER VIEW HOME

LISTING SOLD by Oltersdorf Realty LLC on 11-17-17
10011 N Old Farm Road, Northport MI – Lake Michigan Sunset Water Views
Asking Price: $367,000

Beautiful sweeping and elevated water views of Lake Michigan, North & South Manitou, and Fox Islands are enjoyed from throughout this homes open floor plan offering 4 bedrooms, 3 baths, 3,950 sq. ft. of finished living area, a large horse or workshop/toy barn, 2 car oversized garage, and much more!  Enjoy the tranquil setting of this Gentleman’s farm on 5 beautiful acres located within minutes of the charming waterfront Village of Northport and its popular beaches and marina!

Lot 241 N Forest Beach Shores, Northport - SOLD

SOLD NORTHPORT WATERFRONT PARCEL

LISTING SOLD by Oltersdorf Realty LLC on 11-17-17
Lot 241 - N Forest Beach Shores, Northport, MI - 60' on Grand Traverse Bay
Asking Price: $122,900

Beautifully treed waterfront building site with direct frontage on Lake Michigan located near the end of a quiet low traffic and paved county maintained road within the Cherry Homes development. Neighborhood amenities include a club house, tennis and basketball courts, playground, and hiking trails. Great neighborhood for a primary or vacation home close to state land! Low bluff retaining wall has been installed to protect the property water frontage. Wonderful sandy frontage!

2017 Lake Michigan Water Levels

Current Lake Michigan Water Levels 

The United States Army Corps of Engineers collects and publishes current / past Lake Michigan water level data which is very important to many property owners in Leelanau County & Grand Traverse County who own real estate on Lake Michigan or Grand Traverse Bay. Their last reading took place on November 13, 2017.

November 13, 2017                   580.13 feet

Difference from November 10, 2016:                             +9 inches
Difference from long term average:                             +19 inches
Difference from highest monthly average (1986) :       -21 inches
Difference from lowest monthly average (1964):        +47 inches
Projected change in levels by December 10, 2017:       -1 inches

Click here to open/download the full report for the current month:
http://lre-wm.usace.army.mil/reports/GreatLakes/GLWL-CurrentMonth-Feet.pdf

For more information on current & past historic records regarding the Great Lakes Water Levels please visit: http://www.lre.usace.army.mil/Missions/Great-Lakes-Information/Great-Lakes-Water-Levels/Water-Level-Forecast/Weekly-Great-Lakes-Water-Levels/

706 N Dockside Circle, Unit D-2, Suttons Bay - SOLD

SOLD SUTTONS BAY WATER VIEW CONDOMINIUM

LISTED & SOLD by Oltersdorf Realty LLC on 11-10-17
706 N Dockside Circle, Unit D-2, Suttons Bay, MI - Water View Condominium
Asking Price: $440,000

This beautifully appointed Suttons Bay condominium offers direct panoramic waterfront views and shared water frontage within the maintenance free community featuring an indoor swimming pool, tennis/pickle board court, outdoor hot tub, elevators, and optional marina use.  Features include durable stone and cement board siding, energy efficient construction, quality cherry cabinetry, granite kitchen countertops, wood and ceramic tile flooring, living and dining rooms enjoying a gas two sided fireplace and wonderful water views, large master suite with a private bath enjoying a jet tub and tile walk in shower, three spacious bedrooms, lower level family room/fourth bedroom walks out to the marina and private waterside patio, and a 2 car garage! 

261 Red Fox Ridge, Traverse City – SOLD

SOLD TRAVERSE CITY CONDOMINIUM

SOLD by Oltersdorf Realty LLC on 11-10-17
261 Red Fox Ridge, Traverse City, MI - Port of Old Mission Condominium
Asking Price: $429,000

Beautiful Port of Old Mission condominium finished in 2011 featuring 3 bedrooms, 2.5 baths, 2700+ sq ft of finished living space, cathedral ceilings, fireplace, high end kitchen, and a 2 car attached garage only minutes from downtown Traverse City! *Photos provided by Traverse North Realty.

.N Jacobson Road, Northport - SOLD

SOLD LEELANAU COUNTY VACANT PARCEL

LISTED & SOLD by Oltersdorf Realty LLC on 11/10/2017
N Jacobson Road, Northport, MI - Elevated 10 Acres with Sweeping Water Views
Asking Price: $175,000

Dramatic parcel offers unparalleled panoramic elevated views of both Grand Traverse Bay and Old Mission Peninsula to the east & Lake Michigan to the west from this 10 acres located just west of Omena! This elevated gently sloping land is the ideal home & vineyard location that you have been searching for!

5544 E Kabat Road, Cedar – SOLD

SOLD CEDAR HOME & ACREAGE

Listing Sold by Oltersdorf Realty LLC on 11-9-17
5544 E Kabat Road, Cedar, MI – House, Morton Building, and 45 Acres
Asking Price: $395,000

Extremely private location featuring a charming year-round cottage, an impressive 48x42 Morton Building, and 45 acres with a mixture of hardwoods and rolling open countryside! The quality constructed home built in 2005 offers 1,325 finished sq ft, open kitchen/dining room layout, hardwood flooring, main floor master bedroom & laundry, 2 bathrooms, covered front porch & rear deck with Trex composite decking, Pella windows, cedar siding, a/c, and zoned in-floor radiant heat. The extraordinary 2,304 sq ft Morton Building features a 10’ tall overhead door, in-floor radiant heat throughout, an air conditioned commercial kitchen with appliances, ¾ bath, and a 12’ wide lean-to for additional storage!

0 N Bay View Avenue, Northport - SOLD

SOLD NORTHPORT WATERFRONT LOT

SOLD by Oltersdorf Realty LLC on 11-3-17
N Bay View Avenue, Northport, MI - 66' on Grand Traverse Bay + Pole Barn
Asking Price: $105,000

Fantastic value for this direct waterfront parcel located between Omena and Northport down a quiet cottage lined private road. The 0.48 acre parcel features 66' of private direct frontage on Grand Traverse Bay / Northport Bay and offers a high spot approved for a on-site septic system and a newer pole barn!

2016 Leelanau County Home Sales: January to September

The 2017 3rd quarter (January 1 – September 30) home sales data have been posted in the charts above. The home sales statistics compare real estate housing sold in Leelanau County from January 1, 2017 through September 30, 2017 to the same time period in 2016, 2015, 2014, 2013, 2012, and 2011. This includes the townships of Bingham, Centerville, Cleveland, Elmwood, Empire, Glen Arbor, Kasson, Leelanau, Leland, Solon, Suttons Bay, and the City of Traverse City within the southeast corner of Leelanau County.

2017 Leelanau County Home Sales Volume has increased a +11.29% compared to this time last year and total houses sold has increased +7.04% over last year. Average sales price has increased +3.97% and Median Sales Price has increased +0.16%.

This report is based upon sales information obtained from the Northern Great Lakes Realtors MLS from 2011-2017. Undisclosed sales are not included in the data. This is for basic review purposes only. All attempts for accuracy have been made but cannot be guaranteed.

Jonathan Oltersdorf, Oltersdorf Realty, LLC
Phone: 231-271-7777
E-mail: jonathan@oltersdorf.com

2017 Grand Traverse County Home Sales: January to September

The 2017 3rd quarter (January 1 – September 30) home sales data for Grand Traverse County has been posted in the charts above. The home sales statistics compare real estate housing sold in Grand Traverse County from January 1, 2017 through September 30, 2017 to the same time period in 2016, 2015, 2014, 2013, 2012, and 2011. This includes the townships of Acme, Blair, East Bay, Fife Lake, Garfield, Grant, Green Lake, Long Lake, Mayfield, Paradise, Peninsula, Union, Whitewater, and the City of Traverse City.

So far in 2017 Grand Traverse County Home Sales Volume has increased +4.80% compared to this time in 2016. Average sales price is up +12.50% while Median Sales price is up +15.00%. Total number of units sold has decreased -6.84%. For the 4th year in a row there remains low home inventory, especially in the downtown Traverse City Area.

This report is based upon sales information obtained from the Northern Great Lakes Realtors MLS from 2011-2017. Undisclosed sales are not included in the data. This is for basic review purposes only. All attempts for accuracy have been made but cannot be guaranteed.

Jonathan Oltersdorf, Oltersdorf Realty, LLC
Phone: 231-271-7777
E-mail: jonathan@oltersdorf.com

8888 N West Bay Shore Drive, Northport - SOLD

SOLD NORTHPORT HOME

LISTING SOLD by Oltersdorf Realty LLC on 10-16-17
8888 N West Bay Shore Drive, Northport, MI – Home with Water Views & 4.25 Acres
Asking Price: $209,000

Set back nicely from the roadway on a private 4.25 acre parcel this low maintenance home features 3 bedrooms & 1.75 baths including a private master suite, open living room/kitchen layout, gas fireplace, chef’s kitchen, 1300+ finished sq ft, laundry/mud room, attached 2 car garage with 400+ sq ft of finished loft/storage space, and a spacious rear Trek deck, Andersen windows and door walls, all offering elevated eastern facing Bay views! The private parcel offers a mixture of open and wooded topography, pond, paved private driveway, 240 sq ft shed, a 390 sq ft covered carport, and a wonderful location just 1 mile south of the charming Village of Northport! Wonderful year round or vacation get away.

9890 S West Bay Shore Drive, Traverse City - SOLD

SOLD TRAVERSE CITY WATERFRONT HOME

 LISTING SOLD by Oltersdorf Realty LLC on 10-6-17
9890 S West Bay Shore Drive, Traverse City , MI – Home with 2.80 Acres & 106’ on West Bay
Asking Price: $325,000

This 1950’s 3 bedroom ranch home is situated in a fantastic location just 5 miles north of downtown Traverse City and features a rare 2.80 acre parcel and 106’ of private deep sandy water frontage on West Bay perfect for boating, swimming, and water sports! Additional features include low maintenance brick exterior, living room with a fireplace, detached 2 car garage, full unfinished basement, Bay views throughout the home & property, natural gas, private well & sewer, and 2+ acres of private woods out the backdoor. Ideal Northern Michigan cottage, vacation rental property, or use as a year-round home in desirable Leelanau County!