Michigan Senate and House to Agree on Tax Reform

The Michigan Senate passed legislation to hopefully stimulate the housing industry in Michigan. A similar stimulus package was passed by the Michigan House last year which would give homeowners a 18 month moratorium on the “pop-up” tax.

What’s the “pop-up” tax?

It is tax in Michigan that effect homeowners when they sell their home and want to move up to purchase a new one. For example, you buy a home in Michigan and the new home buyer gets a notice of an increase in their taxes. Since Proposal A was introduced, it gives the Townships and Municipalities the ability to increase taxes when the home owner sells to the new buyer and the deed is transferred.

Under the Headly amendment, taxes could only be increased up to the rate of inflation or 5% whichever is less. However, when the deed in transferred to the new home owners, taxes go up to the current assessed values.

Here is an example: We were thinking about down-sizing a few years ago. Didn’t need the big house most of the children were gone. We have been in our home for 15 years and our taxes have only gone up incrementally. When we started to look around, to see what we could find in a small home, the taxes were so high, they we decided to stay put and keep the big house with lower taxes.

The Senate Plan would create a 33 month window. It would work by the homeowner getting a tax credit to reimburse new homeowners for any “pop-up” tax.

The thought behind this new bill, in both the House and the Senate is that it would encourage folks in Michigan to move up or down into new homes, without the increased tax liability for 18 to 33 months, whichever compromise is reached. Either way the home buyers would be paying more in taxes eventually, so it is a MORATORIUM, not a tax cut.

Senator Jud Gilbert from Algonac, and Senator Roger Kahn, from Saginaw Township, both Republicans feel this moratorium is necessary to stimulate the Michigan’s housing market and spur the economy.

Here are the bills for further reading: SB 1065, HB 4215

Details can be found at 791, 790 and 4215.

I’m still not sure if this is the solution…

The better answer would be for Michigan to attract more jobs into our state.

As I Realtor who has been selling and marketing home in the Ann Arbor, Saline, Washtenaw County Area for 13 years, I rarely have a client not decide on a home based on the taxes. When it does come up, it is in Saline City, which has much higher taxes than the Townships surrounding it like Lodi, Saline Township, York Township, Pittsfield Township.

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