I saw an interesting bit on the GRAR website today that is either new or new to me. It details information about the Homestead Property Tax Exemption for Michigan. As Michigan Realtors know, Michigan law permits property owners to claim a principal residence exemption, otherwise known as Homestead, from taxes by school districts.
Only one exemption may be claimed by a person. The state defines a principal residence as one place where a property owner has his or her true, fixed, and permanent home which continues until another principal residence is established.
Unbeknownst to me, GRAR states that Michigan law requires a property owner rescind his or her principal residence exemption no later that 90 days after the property ceases to be used as his/her principal residence. Failure to do so, can result in a $5 per day fine up to $200.00. In addition, corrected tax bills including penalties and interest can be issued, with a lien being placed on the owner if he/she fails to pay.
GRAR is recommending that any vacant listing an agent is involved with on either side of the transaction, should have proof of recision given to the agent.
This is probably a good thing that we do this. I had a seller a few years ago, list his condo with me in Gaines Township, move to Minnesota to rental living for a year while his condo here took time to sell. Somehow Gaines found out that he changed the address on his Driver's License, and started billing him for non-homestead taxes. So, everyone should be aware that principal residence doesn't even mean the only home you own. It is the place where you live! Not what all seller's want to hear with multiple properties or a vacant home they are trying to sell. Unfortunately for Michigan, May 1 is right around the corner, so Homestead exemption must be claimed by then or even those homes that will be owner occupied after this date will continue to be taxed at the non-Homestead rate for that municipality.
GRAR also recommended calling the MAR Legal hotline at 1-800-522-2820 for further information, or better yet, have your clients consult with an attorney.
Jason Carpenter
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Jason, we also had this situation recently. Most Realtors do think that it is simply an ownership issue...but increasingly townships use a change in the driver's license to change the status whether the owner alerts them or not, irregardless of if a purchase has been made elsewhere. Thanks for this well written article.