My father is afraid he will need to move as he heard that the homestead exemption may disappear. From your document on Gov. Snyder’s proposed changes it appeared there may be a decrease in the exemption for seniors. Is that the case and if so, what may that look like? We reside in Northern Michigan and my father pays $7,000/year in property taxes with 100 percent homestead. If he had to pay more, they may need to move.
Thank you for any guidance that you can provide.
Michigan’s property tax system has two items that use homestead in the title. This might be creating confusion.
Proposal A of 1994 created a new funding system for Michigan schools. Part of that system is a two-tiered property tax rate for school operating taxes. Owners of homestead properties (“the one place where a person has his or her true, fixed, and permanent home to which, whenever absent he or she intends to return …”) receive an exemption on 18 mills of taxation. Non-homesteads (businesses, rental homes, second homes, etc.) do not receive this exemption and are subject to the tax. This homestead exemption (now termed Principle Residence Exemption) was not affected by the statutory changes enacted earlier this year.
The second use of the term is for the homestead property tax credit as part of the state income tax. As a way of providing property tax relief to low income property owners and seniors, the homestead property tax credit allows you to take a credit for some or all of the property taxes paid. As a result, less income taxes are paid. This homestead property tax credit was affected by the statutory changes enacted earlier this year. (See p. 2 of this document www.michigan.gov/documents/taxes/Tax_Change_Summaries_-_Individual_Income_Tax_359807_7.pdf).
I hope this explains what is changing and helps to clarify any confusion. Let us know if we can help further.
Is the Homestead Exemption going to disappear?