I am clipping an interesting portion of an email just received from the Michigan Association of Realtors, witha bit of good news for those home sellers who are carrying two homes in Michigan.
Yesterday, Governor Granholm signed 3 significant pieces of REALTOR® supported legislation. First, legislation enabling home sellers to retain 2 principal resident exemptions for property still on the market after the seller has moved elsewhere in the state. The signing of this legislation is a huge step in aiding struggling sellers who have had homes on the market for over a year and have lost their principal residence status on that property.
House Bill 4215, now Public Act 96 of 2008 sponsored by Representative Ed Gaffney (R-Grosse Pointe Farms) enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:
the property is not occupied,
the property is for sale
the property is not leased or available for lease
the property is not used for any business or commercial purpose
The Michigan Association of REALTORS® (MAR) was active in pointing out to lawmakers that the struggling economy in Michigan has forced several home sellers to relocate to other areas of the state, in some instances continuing to market a home that they have not lived in for over a year. As a result, the home was no longer treated as a principle residence and the homeowner lost the principal residence exemption. Retention of an existing homestead credit for an unoccupied home that is currently for sale would offer relief to sellers who have had to relocate for whatever reason. The MAR is grateful to Representative Gaffney for being receptive and following through on this very important piece of property tax relief.
I am left with a few questions after reading this.
- If the seller has moved out of state, are they eligible as well?
- Does this take place now? The May 1 deadline for removing or replacing a property tax exemption and having it impact the coming tax year is almost upon us, so some people may need to rush to replace the exemption.
- Can a previously removed exemption now be replaced? I assume the answer is yes, but I don’t know.
Clearly, this is a great benefit for those who qualify. The audience is probably limited, at least in Metro Detroit, where we are seeing transferees leave the state. Also, many of those who would prefer to sell have turned to leasing in order to reduce their cash out flow each month. These reluctant landlords will not benefit either. This could actually help to reduce the number of rental homes coming to market, though I don’t think it will have a significant impact there.