Ray's Blog

As you know, PA 96 of 2008 created a new tax break for people who have moved to a new principal residence but have been unable to sell their previous principal residence. Under the new law, the owner is allowed to maintain a Principal Residence Exemption (PRE) on their former home for up to 3 years if the home is vacant and for sale. This new law expands the Principal Residence Exemption to unsold homes, essentially allowing for two exemptions where homebuyers have their original property on the market but are now living in their new home elsewhere in the state.

To claim this tax break, the owner must file a Conditional Rescission of Principal Residence Exemption Form #4640 with their local assessor. Unfortunately, the bill was not signed until April of this year and that left a narrow window for taxpayers to file before the May 1 deadline in order to claim this benefit for 2008.

However, an amendment was inserted into Public Act 198 of 2008, allowing any homeowner who missed the May 1st deadline for the 2008 tax year to now file an appeal with their community's July or December 2008 Board of Review. This is a tremendous victory and offers property tax relief for homeowners in Michigan.

Individuals should contact local assessors for meeting dates and additional information. Traditionally, the July board of review has met the Tuesday following the third Monday in July (July 22 this year). A change in the law (PA 122 of 2008) allows communities to schedule their board of review any time that week. While most communities will meet on July 22, taxpayers should contact their local government to be sure they know when the board of review meets in order to submit Form #4640 to the board of review for consideration.

The ability to appeal to the board of review is for 2008 only. Homeowners will need to apply to keep their PRE by December 31 of the previous year. Homeowners can already file the form for 2009 with their local unit of government. For additional information, please check out www.Michigan.gov/treasury.

Download form here: http://www.michigan.gov/documents/taxes/4640_231633_7.pdf

Ray Spitler, GRI, e-PRo, Certified Short Sale Expert
www.MBShomes.com
(989)607-6252

On March 27, 2008, the Michigan Senate took action in passing legislation to stimulate the housing industry in Michigan. The Senate Economic Stimulus Plan gives a boost to the housing industry by providing property tax relief, while putting more money back into the homeowner's pocket. It does so by offering a window for homebuyers to avoid the pop-up tax now and for the duration of their homeownership.

The Senate package (SB 1065, 790, 791, HB 4215, ) alleviates the issue of homeowners who continue to lose equity in their homes, while allowing potential homebuyers to move forward with the dream of homeownership without financial penalties. Senator Jud Gilbert (R-Algonac) and Senator Roger Kahn (R-Saginaw Twp) spoke on the Senate floor today and stressed the importance of a "pop up" tax moratorium in order to boost Michigan's housing market while spurring the economy.

Details of the legislation include:

791 (Kahn substitute) offers immediate substantial relief for Michigan taxpayers who purchase a home within the next 33 months.

SB 1065 (Cassis) - Increases the Homestead Property Tax Credit from $1200 to $1300 to those who qualify 790 (Pappageorge) - Increases the income thresholds of the Homestead Property Tax Credit by $10,000

4215 (Gaffney) Extends principal residence exemption to unsold homes

You may recall that a similar package was introduced in the House last year, which implemented an 18-month moratorium on the "pop up". The Senate plan creates a 33-month window. It works by providing an income tax credit to reimburse homebuyers for any "pop up". Those homeowners with no income tax liability would still receive a check from the state for that "pop up" amount. While the House and Senate plans differ in their mechanics, we are confident that both sides will come together and work to provide aid to homeowners and homebuyers. This will give Michigan's economy a much needed shot in the arm. This is a historic time for homebuyers, and it's a great time to buy.