By Bonnie L. Beutler
Many owners in Michigan are trying to sell one home while living in another home. Fortunately, owners can now retain an additional homestead exemption, now called a “principal residence exemption,” for up to three years.
A principal residence exemption excuses homeowners from a portion of the “local school operating taxes” on the summer property tax bill. Generally, the following rules apply:
- A request for a principal residence exemption must be filed by May 1.
- A homeowner is required to rescind an exemption when he no longer owns the property as his principal residence. He must rescind within 90 days of the date he no longer owns or occupies the property, whichever comes first. The exemption will then be removed the December 31st following the sale or change in use.
Traditionally, owners could only claim one exemption. However, recent legislation [MCLA 211.7cc(5)] provides that, if an owner is eligible for and claims an exemption for their current principal residence, they may also retain an exemption on property previously exempt as his or her principal residence if that previously exempt property is:
- not occupied,
- for sale,
- not actually leased, and
- not used for any business or commercial purpose.
The previously exempt property is eligible for an exemption if it is available for lease but has not been leased. The exemption cannot be used retroactively. In addition, owners do not qualify if they move out of state.
How do I file a second exemption?
You must file a “conditional rescission” form with the assessor on or before May 1. In addition, for every year in the 3-year period, you must verify to the assessor (before December 31) that the “previously exempt” property is still not occupied, is for sale, is not leased, and is not used for any business or commercial purpose. If you fail to verify these things, the assessor will deny the additional exemption. Also, if the “previously exempt” property is leased, the assessor will deny the additional exemption retroactively.
The availability of a second exemption means tax relief for many homeowners in Michigan.
For further information regarding these matters, please contact Ms. Beutler at 248.740.5690 or click here to send an email.
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