Principal Residence Exemption Legislation Unanimously Passes Senate
Today, the Michigan Senate voted 38-0 in support of legislation providing a fair process when it comes to their property taxes.
Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years.
Senate Bill 349 now heads over to the House for consideration.
Copyright Michigan Association of REALTORS®. Reprinted with permission.
IF THIS BECOMES LAW WHAT DOES IT MEAN?
Currently, Michigan property owners have to file a principal residence exemption form by May 1 to get lower primary home taxes for the full year. If you miss the May 1 deadline or you purchase a house that wasn’t a primary home after May 1 you will pay the higher non homestead taxes until the following year. If this bill becomes law the new deadline for your summer tax bill (the much higher bill) will be June 1 and November 1 for the winter tax bill. In short, it will save the home purchaser money if you buy a non-homestead (vacant or non primary residence) home after May 1 and intend to occupy the home as your primary residence.
Exemptions for bank owned properties.
This also appears to be a major tax break for lending institutions and banks that can file an exemption to receive the homestead property tax rate (primary home rate) for vacant assets that are currently for sale. This also could allow for purchasers to qualify for their mortgage based on the lower tax rate and qualify for a slightly more expensive home.
Here is the most relavent portion of the bill:
An owner of property may claim 1 exemption under this section by filing an affidavit on or before May 1 FOR TAXES LEVIED BEFORE JANUARY 1,2012 OR, FOR TAXES LEVIED AFTER DECEMBER 31, 2011, ON OR BEFORE JUNE 1 FOR THE IMMEDIATELY SUCCEEDING SUMMER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES OR ON OR BEFORE NOVEMBER 1 FOR THE IMMEDIATELY SUCCEEDING WINTER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES
You can read and/or download the full 27 page Senate Bill 349 by clicking here:
http://www.legislature.mi.gov/documents/2011-2012/billengrossed/Senate/pdf/2011-SEBS-0349.pdf
UPDATE: APRIL 26, 2012: Yesterday, the Michigan House of Representatives voted 109-1 in support of legislation providing a fair process when it comes to their property taxes. The bill now heads to the Governor, where we expect his signature before May 1st.
UPDATE #2: MAY 1, 2012: PRE Enhancement Legislation Signed by the Governor 5/1/2012 Today, Governor Snyder signed legislation providing homebuyers a fair process when it comes to their property taxes. Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years.
Below are a few FAQ’s regarding the new law:
1. Does the legislation take effect this year?
A. Yes. The new law moves current May 1st PRE filing deadline to June 1st of this year.
2. How does it work?
A. If a homebuyer purchases a Principal Residence and closes on or before June 1st, they can take advantage of a significant tax break by filing for a Principal Residence Exemption.
3. When is the additional filing date?
A. November 1st. This allows for tax relief in those communities that still collect a portion, if not all of their non-homestead mills, on the December tax bill.
4. If my client buys after June 1st this year, what can they expect?
A. If a homebuyer purchases a home after the June 1st filing deadline, and their local tax authority collects all non-homestead mills on the spring tax bill, their property taxes may not reflect the exemption until the next tax bill. If however that local tax authority collects a portion of the non-homestead mills on the winter tax billing cycle, the homebuyer can file for a PRE before the November 1st and exempt themselves from any non-homestead mills collected on the December bill.
5. What about the foreclosure provisions?
A. Banks have the option of maintaining the home’s Principal Residence status by filing a Conditional Rescission. By maintaining this exemption status, it’s the expectation that borrowers will be able to qualify for financing on these foreclosed properties at the PRE rate and begin paying the lower rate of taxation as soon as they move into the home. To make up for the lost school revenue, banks will be assessed a newly defined tax that will keep the 18 mills (which they presently pay on any foreclosed property) when a property can no longer qualify as a principle residence. It is important for those REALTORS® working with bank clients to let lenders know about the change and communicate the benefit of filing a Conditional Rescission.
Copyright Michigan Association of REALTORS®. Reprinted with permission.
Filed under: Homeownership in the News
HAUP provides homeowners a forbearance of monthly mortgage payments, either reducing them or suspending them for at least three months. Servicers can extend the timeline depending on regulatory guidelines.
Homeowners who qualify for the program have a first-lien mortgage originated on or before Jan. 1, 2009. The unpaid principal balance on a single-unit primary residence must be equal to or less than $729,750, and the mortgage has to be in default or in imminent default.
Those who have already gone through the Home Affordable Modification Program (HAMP) process are not eligible for the HAUP. HAMP requires borrowers to be employed with some income for the modification to be reduced down to 31% of the monthly income.
But once the borrower finds another job or the borrower is 30 days from the end of the HAUP forbearance period, the borrower can be revaluated for a HAMP modification.
HUAP joins the Home Affordable Foreclosure Alternatives (HAFA) program, which provides incentives to servicers for providing short sales and deeds-in-lieu of foreclosure, as another net to catch borrowers who fall out or fail the HAMP program.
Source: HousingWire.com, Jon Prior, (07/04/2010)
I have included below an article about the 1.5 Billion dollars Obama said he was designating from the Troubled Asset Relief Program to fund programs at local housing finance agencies in California, Florida, Nevada, Arizona and Michigan, which have seen home prices decline more than 20 percent from their peaks.
1.5 Billion Allocated for Five Struggling States – Florida, Michigan, California, Nevada, and Arizona
I am a licensed Associate Broker in both Florida and Michigan…. www.KayPearson.com and can say that both states have seen 40 – 50% declines in house values, at least in the markets that I represent. Our most recent tax assessments received in Michigan for 2010 support that as well.
Help for the Hardest Hit Housing Markets
THE WHITE HOUSE
Office of the Press Secretary
FOR IMMEDIATE RELEASE February 19, 2009
These bailout programs make a statement, but are they a solution?
Frankly, I think that band-aids were invented to stop the bleed.
Nothing, thus far, has proven to provide such an aide.
WHY is money thrown on the table without accountability first?
I was anxious to see what this plan had that might provide further HOPE than the HOPE we have been offered previously. (Less than 10% of home modifications have been completed)…How many resources have been spent? Actually, money could have been saved if all those denied modifications were not even attempted. What amount of money was wasted? How much money will be wasted figuring out how to best use this money?
Waterford House for Sale by the pearson group
We currently have two clients who have 700+ credit scores, growing families, and want to buy bigger houses in Michigan but they don’t have $50,000 liquid cash to close the first deal to buy the second home. Why don’t we have an incentive program for people who DO NOT have a HARDSHIP (by mortgagee definition)? Perhaps their current lender could shave a portion of their pay-off needed to bridge them into the bigger home.
345 Roslyn, Waterford
Wouldn’t that help our housing market? We have many qualified, willing buyers, who want to buy in price brackets that are still plummeting. How about we work with these able, willing, buyers, who want to help our housing market?
With all that rambling and NO solution, I have another thougth. Both of the clients that I have referred to in this blog, are financed with the same lender, a large known “Holding their Own” lender. I am going to make some calls to talk to them about their inventory or current delinquencies to see if we might be able to discuss a trade. Don’t they still WIN? We might even find a WIN …Win.
Is anybody looking for the Win, Win Solutions?
The Pearson Group
Robin Cutler and Kay Pearson
248-860-0366
RobinCutler@RealEstateOne.com
KayPearson@MaxBroock.com
