Proposal A…approved by Michigan voters in 1994,
significantly altered Michigan Property Tax Law. Prior to 1995, taxes were
calculated on State Equalized Value, which approximates half of Market Value.
Beginning in 1995, taxes were based on a new value: Taxable Value. By law,
the increase in Taxable Value cannot exceed the lesser of two factors:
Consumer Price Index (C.P.I.) or 5%. However, some circumstances will alter
that computation, namely: Transfers of ownership, new construction or
demolition. If a transfer of ownership occurs in 2005, then the Capped Value
no longer applies. For 2006, the State Equalized Value will be the new Taxable
Value. We refer to this as an “uncapping of taxable value”. The new purchaser
will be subject to a new starting base Taxable Value. Barring any physical
changes to the property (new construction/demolition), the taxable value will
again increase at the lesser of two rates: C.P.I. or 5%. Assessed Values, as
equalized, are still required to be at 50% of Market Value. Assessments are
reviewed and updated annually. Increases in assessments are not subject to any
cap or formula.
Name Change from Homestead Exemption to Homeowner’s
Principal Residence Exemption
PA 140 of 2003 provides that, effective January 1, 2004, the word Homestead has been removed from the exemption statutes and has
been replaced by the words Principal Residence. While P.A. 140 of 2003 uses the
words Principal Residence, the exemption will be known as the Homeowner’s
Principal Residence Exemption so that a renter does not mistakenly file for the
exemption.
* The filing deadline for the Homeowner’s Principal
Residence Exemption is May 1 of the current year. You must own and occupy by
May 1st.
* You may claim the exemption for only one residence
* If you purchase a previously owned home in which the
prior owner benefited from the exemption, you are entitled to the benefit of
that exemption, even if you occupy AFTER May 1. However, you will need to file
an affidavit in order to continue receiving the exemption. You must meet all
of the pertinent criteria in order to receive the exemption for the succeeding
length of ownership.
* Property which is VACANT and CONTIGUOUS to your
principal residence is eligible for the exemption
* What are the eligibility requirements for receiving the
Homeowner’s Principal Residence Exemption ??
You may claim the homeowner’s principal residence
exemption if you meet all of the criteria below:
A. You are a resident of the State of Michigan.
B. You own and occupy the home as your principal
residence.
C. Neither you, nor your spouse if you file a joint
income tax return, receive an exemption, deduction, or credit substantially
similar to the Michigan Homeowner’s Principal Residence Exemption on property
you own in another state.
D. You have not filed a non-resident Michigan income tax
return.
E. You have not filed a tax return as a resident of
another state.
* Who is a Michigan Resident?
You are a Michigan Resident if Michigan is your permanent
home. Your permanent home is the place you intend to return to whenever you go
away. A temporary absence from Michigan, such as spending the winter in
another state, does not make you a part-year resident.
* What determines Principal Residence?
Michigan Law defines principal residence as the one place
where a person has his or her true, fixed, and permanent home to which,
whenever absent he or she intends to return and that shall continue as a
principal residence until another principal residence is established. In order
to verify a persons claim that a particular property is a principal residence,
Treasury will accept various documents that, taken together, establish that the
person or persons filing the claim occupy the property as
a principal residence. Examples include driver’s license, voter registration
card, cancelled checks listing the property address, statements such as
medical, bank or charge accounts, income tax records indicating the mailing
address and insurance policies. No one of these factors taken alone is
controlling over any other factor. Documentation needs to verify occupancy
between the periods of January 1 to May 1 of each year.
If a residence no longer qualifies for the Homeowner’s
Principal Residence Exemption, you must file a Request to Rescind.
Multi-Purpose property is not eligible for a full
exemption. The Homeowner’s Principal Residence Exemption only applies to
property that you own and occupy as your principal residence. If you operate a
business in your home, you are not eligible for a 100% exemption. If you write
off portions of your home for income tax purposes, you are not eligible for a
100% exemption. If you own and/or operate a Bed and Breakfast, you are not
eligible for a 100% exemption. If you have questions about calculating your
reduced exemption percentage, please contact the Assessing Department.
