Michigan Principal Residence Exemption

Posted 10 months ago. Applies to Michigan, 0 helpful votes

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A principal residence is exempt from the tax levied by a local school district for school operating purposes if the owner claims the Principal Residence Exemption. MCLA 211.7cc(1). Claiming a Principal Residence Exemption is often referred to as having a Homestead Exemption on the property. If a Principal Residence Exemption is not claimed for any reason, the taxes are referred to as Non Homestead taxes. Non Homestead taxes are higher due to the inclusion of the tax levied by the local school district for school operating purposes. There is a strict filing deadline to claim the Principal Residence Exemption for every upcoming tax year. There are at least two ‘tax years’ in Michigan municipalities. The first tax year is referred to as Summer or City and runs from July 1 to June 30 of the following year. However, the deadline to file the affidavit for the Principal Residence Exemption is on or before June 1, immediately preceding the start of the Summer tax year. If a property closed on June 2 and the Summer taxes were Non Homestead at the time of closing, then the new homeowner would have to wait until July 1 of the following year for the Exemption to take effect. It follows that in this scenario, Summer taxes would have to be escrowed at the Non Homestead rate until June 30 of the next tax year. It is worth nothing that if a property closed on or before June 1 of that year, then the new homeowner would have to file the Principal Residence Exemption by the close of business on June 1. The same principle applies for the second tax year. The second tax year is referred to as Winter or County and runs from December 1 to November 30 of the following year. However, the deadline to file the affidavit for the Principal Residence Exemption is on or before November 1, immediately preceding the start of the Winter tax year. If a property closed on December 2 and the Winter taxes were Non Homestead at the time of closing, then the new homeowner would have to wait until December 1 of the following year for the Exemption to take effect. It follows that in this scenario, Winter taxes would have to be escrowed at the Non Homestead rate until November 30 of the next tax year. Some municipalities have a third tax year known as Village. This may start on either July 1 or December 1, depending on the municipality. Nevertheless, the aforementioned rules for Summer or Winter tax years apply to the corresponding Village tax year.

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Principal Residence Exemption

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