Public Acts 121-122 of 2017 Principal Residence Exemption:
Public Acts 121-122 of 2017 were signed into law on October 5, 2017. The Acts amend MCL 211.7cc and MCL 211.120 of the General Property Tax Act to provide that the assessor of a local tax collecting unit, the Department of Treasury, or a county treasurer or equalization director can require a person who claimed a principal residence exemption (PRE), within 30 days of claiming the PRE, to file the Principal Residence Exemption Affidavit of Similar Exemption in other States, Form 5565, stating that he or she had not claimed a substantially similar exemption, deduction, or credit in another state. Public Act 121 also prohibits a person from rescinding a substantially similar exemption, deduction, or credit claimed in another state in order to qualify for the Michigan PRE for any years denied, if the assessor of a local tax collecting unit, the Department of Treasury, or a county denied an existing claim for a PRE. The Act prescribes a penalty of $500 for a person who claimed a PRE under the Act and a substantially similar exemption, deduction, or credit in another state.
Public Act 122 amends the General Property Tax Act to extend a misdemeanor penalty to a person who claimed a substantially similar exemption, deduction, or credit on property in another state with the intent to obtain a PRE under the Act.
Treasury staff is available to assist and answer questions regarding this Act or other PRE related questions. The following are key contacts:
PRE Program E-mail Address: PTE-Section@michigan.gov.
Copies of all PRE forms can be found online at www.michigan.gov/PRE.
PRINCIPAL RESIDENCE EXEMPTION (PRE) - Homestead Exemption
Mail your completed form to the assessor for the city or township in which the property is located on or before May 1, or November 1 of the year the exemption is being claimed. The exemption information is then posted to the local property tax roll. Normally, when you purchase a home, Form 2368 and other relevant principal residence exemption forms are provided by the closing agents.
There are many variables in determining eligibility for the exemption. The Principal Residence Exemption (PRE Guidelines book provides answers to a number of frequently asked questions).
Form 2602, Request to Rescind Principal Residence must be filed with the assessor for the city or township in which the property is located to remove the PRE. The PRE will be removed from the local property tax roll by the assessor beginning with the next tax year. Failure to rescind a PRE may result in additional taxes, interest, and penalties. Under certain circumstances, a person may qualify for a conditional rescission which allows an owner to receive a PRE on his or her current Michigan property and on previously exempted property simultaneously for up to three years. To initially qualify for a conditional rescission, the owner must submit a Conditional Rescission of Principal Residence Exemption (PRE), Form 4640
What is a Principal Residence Exemption (PRE)?
Section 211.7cc and 211.7dd of the General Property Tax Act, Public Act 206 of 1893, as amended, addresses PRE claims (formerly known as the Homestead Exemption). A PRE exempts a principal residence from the tax levied by a local school district for school operating purposes up to 18 mills. To qualify for a PRE on a parcel of land, a person must be a Michigan resident who owns and occupies the property as a principal residence. The PRE is a separate program from the Homestead Property Tax Credit, which is filed annually with your Michigan Individual Income Tax Return.
To claim a PRE, the property owner must submit a Principal Residence Exemption (PRE) Affidavit Form 2368,
Rescinding or Denying a Principal Residence Exemption
The Michigan Department of Treasury may issue denials for the current year and three immediately preceding years. For any year that an exemption should have been rescinded and was not, (current year and three immediately preceding), the exemption will be denied. A letter of inquiry is sent to the property owner, who has thirty (30) calendar days to respond. If the property owner does not meet the criteria for a principal residence exemption, the exemption is denied and the property is billed for the amount of school taxes they would have been charged for the year the exemption was denied. They are also levied an interest charge of 1.25 percent per month since the original tax bill due date.
When a person no longer owns or occupies the property as a principal residence, he or she must file a Request to Rescind Homeowner’s Principal Residence Exemption (PRE), Form 2602.
For further questions regarding Principal Residence Exemptions, please consult the Principal Residence Guideline Book (see above) or visit the State’s website. You may also contact your local Township or City Assessor.