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Michigan Homeowners Principal Residence Exemption

Michigan homeowners need to be aware of the new law that went in to effect for homeowners who have moved and have not been able to sell their home in Michigan. It is an extension of the Homeowners Primary Residence Exemption.

The law is called PA 96 of 2008, and it is a huge tax break for people in Michigan that expands the Principal Residence Exemption on unsold homes. If you live in Michigan, and own a home you are allowed to claim one house for a primary home exemption.

Now the legislature has allowed you keep two exemptions "if" you move from one home in Michigan to another one and are still trying to sell the previous home. The home must be vacant and for sale.

Michigan map Some of the requirements are:

•1) The home owner must file a Conditional Rescission of Principal Residence Exemption form #4540. This is a live document and you can fill it out on line and email it.

•2) The bill was NOT passed until April and the deadline was May 1^st. It was a narrow opportunity to get the message out. So now the legislature has extended the deadline and you can file and appeal with your communities board of review.

•3) The appeal will only be for 2008, and you will need to file each year until your home sells. Currently the tax savings on the Principal Residence Exemption is for 3 years.

•4) For more information you can check out the Michigan Department of the Treasury.

Although the government, passed this law for homeowners in Michigan to be able to move into a new home and keep the housing market moving, as a Realtor is also a selling advantage when buyers are looking at homes. If they are choosing between 2 homes and one home is homesteaded and one is not it makes a huge difference in the new buyers payments until they can file for the May 1^st deadline.

Here is an example in Ann Arbor Michigan for a home priced at $ 270,000. A home without the homestead exemption would have taxed of $ 7989.00 and a home with the homestead exemption would have taxes of $6236.00. That is a savings of $1753. per year for both the seller and the buyer.

Put in your home price, minus 1/2 the sales price If this is not the size of the home you are purchasing you can go to the Michigan Property Tax estimator and put in the price home you are purchasing. Make sure you put in ½ the sales price.

Any questions contact:

Missy Caulk 734-821-0757 or email Missy@MissyCaulk.com

***Originally posted on Ann Arbor Real Estate Talk***

Posted by Missy Caulk-Ann Arbor- Realtor(R)- Ann Arbor Real Estate on 08/20/2008 05:52 AM

Comments (13)

michigan, principal residence exemption, localism for michigan, ann arbor, saline

Originally posted at: Ann Arbor Undressed : Michigan Homeowners Principal Residence Exemption

This post has been included in Michigan Information Washtenaw County, MI Information
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13 Comments on Michigan Homeowners Principal Residence Exemption

AUG

2008

Good Morning Missy. Not a bad law to have. Michigan seems to be proactive in helping home owners.

Missy - That is a great benefit to homeowners having a hard time getting their home sold. I wish this could catch on in other states.

Missy, kudos to Michigan for actively responding to the all too real problem that many home owners are facing in this market. I only wish that other states would follow suit.

Missy, more states should take such an active approach to help home owners.

I heard about this last time I was in Michigan since I own a property up there. I think it's a great idea for helping those in need up there trying to sell their house. Great blog on this topic.

Missy, this is a better response than homeowners walking away. But, with chaning guidelines, not too many people will be able to qualify with 2 1st mortgages for the 2nd home. AJ

Goodness. With or without the exemption, that is a whopping lot of real estate tax.

Is there an income tax on top of that???

Lenn, that is just the reality of our taxes in Michigan. Yes we do have a state income tax on top of it.

AJ, well this homestead only applies if you have already bought a 2nd home and the one who are in has not sold.

what a perfect "localism" post...I always feel like I know Ann Arbor even though I've never even been there :)

Maria

Great idea of getting this out to everyone. I knew this but never thought about posting it as I figured everyone gets a lot of communication about these things (but then I am one of those who read those communications). You are always a contribution by thinking of what will be good for everyone to know - and it seems by the comments that it giving a good impression of Michigan and what we are doing to address the issues. Many times I can' think of things to write about - this gives me a new angle to consider.

Cathy, I am like you, I tend to read all the announements from MAR and other news services. I get lots of idea's from them.

AUG

2008

Hi Missy...I know that the housing market in at least some parts of Michigan has been hit pretty hard. This sounds like a great way to help those sellers and the help rebound the market. This sounds like a good government decision.

Your example in Ann Arbor shows a very significant savings.

Kate