T-Minus 4 Weeks: Principle Residence Tax Exemption

So Lansing, in all of its infinite wisdom, decides to blow out the proposal on halting the pop-up tax for eighteen months.  Well, we still have a small thing called the Principal Residence Tax Exemption that could greatly affect your tax bill.  The link will take you to a pdf put out by the State of Michigan explaining the different scenarios for the Principal Residence Exemption. 

If you are currently under contract to purchase a home, and the sellers have already moved out, or been moved out for some time, check the priniciple residence status or homestead status of the property.  If the property is currently non-homestead (not the seller's principal residence) they are paying a higher tax bill than if it was a homestead property (the seller's principal residence).

Here in Ann Arbor that means the difference between 46.1895 (Homestead) and 59.1823 (non-Homestead) millage rates.  To figure your taxes on those millage rates, look at your property's taxable value and multiply the millage by that many thousands.  For example:

• Taxable Value = $150,000 and Homestead millage is 46.1895
• 150*46.1895 = $6,928.43

As you can see the difference between Homestead and non-homestead can be huge.  The deadline for the determination of a property's homestead status is May 1st.  So, if you are currently under contract to purchase and are scheduled to close shortly after the 1st of May, you might want to push the closing up to the end of this month.  If you are purchasing a foreclosure or bank owned property for a principle residence shortly after the first of May, make sure you have negotiated in the difference of homestead and non-homestead tax rates.

Of course, I am always available to assist and look forward to helping clarify this muddy situation!