Principal Residence Exemption Law Changed!

Principal Residence Exemption Legislation Passes Senate (Bill 349)

Before May 1, Michigan property owners had to file a Principal Residence Exemption (PRE) form by the first of May to get lower primary home taxes for the full year. If the homeowner were to miss the May 1 deadline or purchase a home that was a primary residence after May 1, the homeowner would have to pay the higher, non-homestead taxes until the following year.

Effective May 1, 2012, Bill 349 changes:

• The new deadline for homeowner’s summer tax bill will be June 1.
• The new deadline for homeowner’s winter tax bill will be November 1.
• Allows bank-owned properties to retain PRE so buyers can qualify at the lower rate of taxation.

What this means for you

If the property is purchased as a primary residence and closed on or before June 1, 2012: you or your client can take advantage of a significant tax break by filing for Principal Residence Exemption (PRE) to lower your non-homestead taxes for the summer tax bill.

If the property is purchased as a primary residence and closed after June 1, 2012: If you or your client’s local tax authority collects all non-homestead mills on the summer tax bill, your property taxes may not reflect the exemption until the next summer tax bill. However, if the local tax authority collects a portion or all of the non-homestead mills on the winter tax bill, the homeowner can file for PRE before November 1 and exempt themselves from any non-homestead mills collected on the winter bill.

If the property is in foreclosure: Banks now have the option of maintaining the home’s principal residence status by filing a Conditional Recession. By maintaining this status, the buyers of the property will be able to qualify for financing on these foreclosed properties at the PRE rate and begin paying the lower rate of taxation as soon as they move in. It is important for agents working with banks to let lenders know about the change and communicate the benefit of filing a Conditional Recession.

As always, call for a personalized market analysis for your home. Call if you are looking to buy, interest rates are still quite low and  there are many great deals out there for you!

• Ilene Mitz can be reached at 248-752-2330 cell, mitzireo@gmail.com
• Loren Stewart can be reached at 248-622-8999, lorenreo@gmail.com