Michigan Principal Residence Exemption (PRE) and Homestead Exemption

By
Real Estate Agent with Greenridge Realty Oakmont

Many wonder what the difference is between the Michigan "Principal Residence Exemption"  (or "PRE") and the "Homestead Exemption".

 

Simply, what was PREVIOUSLY called the "Homestead Exemption" has been changed and is now called the PRE, or "Principal Residence Exemption". Homeowners sometimes save almost 40% on their property taxes by claiming this exemption.

 

When you purchase a home, in order to qualify for this exemption you must file the Michigan Principal Residence Exemption Affidavit form 2368  with your township (or city) by June 1st for summer taxes or November 1st for winter taxes.  Once you are qualified to receive the exemption, it stays in effect until it is changed (usually due to a deed name change, or a vacated property, etc.).  

 

According to the Mich.gov web site:

"A  P.R.E.  exempts a principal residence from the tax levied by a local school district for school operating purposes up to 18 mills. To qualify for a PRE on a parcel of land, a person must be a Michigan resident who owns and occupies the property as a principal residence."

 

For more information, see Guidelines Book for the Michigan P.R.E.

 

Even if a title company is submitting the completed form to the township (or city) for you, it is a very good idea to appear at the township hall and show them your drivers license with your new home's address, as some townships deny exemptions until you show proof that you are living at the new address.  

 

Yes, this happens, and they do not notify you either that your have been denied the exemption due to lack of residence proof!

 

Do not confuse the former "Homestead Exemption" with the Michigan Homestead Tax Credit , which is still available to Michigan resident homeowners and renters who meet the qualifications and file for the credit on their Michigan Income Tax Form.

 

Also note:  Conditional Recissions, whereby you can claim PRE exemptions on a former property and the new property for the same time period must be filed yearly for each of the 3 years the property may qualify according to the state:

"Conditional Rescission of a Principal Residence Exemption (PRE)

This form enables a person who has established a new principal residence to retain a PRE on property previously exempt as the owner’s principal residence. The conditional rescission allows an owner to receive a PRE on his or her current Michigan property and on previously exempted property simultaneously if certain criteria are met. An owner may receive the PRE on the previous principal residence for up to three years if that property is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose."

for more information on Conditional Recissions, see Mich.gov:

Conditional Recission Form 4640 and instructions

 

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