Proration Legislation up in Senate Finance Committee
Legislation has been re-introduced this legislative session to provide much needed property tax relief to Michigan homebuyers. Senate Bill 349, introduced by Senator Dave Hildenbrand (R-Lowell) allows buyers to take advantage of the Principal Residence Exemption even if they purchase a home after the May 1st filing deadline.
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 prorating the tax liability for those who purchase a home after May 1st.
The legislation is up for consideration this week in the Senate Finance committee. We will keep you updated as this bill makes its way through the legislative process.
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