The Michigan Senate passed legislation to hopefully stimulate the housing industry in Michigan. A similar stimulus package was passed by the Michigan House last year which would give homeowners a 18 month moratorium on the “pop-up” tax.
What’s the “pop-up” tax?
It is tax in Michigan that effect homeowners when they sell their home and want to move up to purchase a new one. For example, you buy a home in Michigan and the new home buyer gets a notice of an increase in their taxes. Since Proposal A was introduced, it gives the Townships and Municipalities the ability to increase taxes when the home owner sells to the new buyer and the deed is transferred.
Under the Headly amendment, taxes could only be increased up to the rate of inflation or 5% whichever is less. However, when the deed in transferred to the new home owners, taxes go up to the current assessed values.
Here is an example: We were thinking about down-sizing a few years ago. Didn’t need the big house most of the children were gone. We have been in our home for 15 years and our taxes have only gone up incrementally. When we started to look around, to see what we could find in a small home, the taxes were so high, they we decided to stay put and keep the big house with lower taxes.
The Senate Plan would create a 33 month window. It would work by the homeowner getting a tax credit to reimburse new homeowners for any “pop-up” tax.
The thought behind this new bill, in both the House and the Senate is that it would encourage folks in Michigan to move up or down into new homes, without the increased tax liability for 18 to 33 months, whichever compromise is reached. Either way the home buyers would be paying more in taxes eventually, so it is a MORATORIUM, not a tax cut.
Senator Jud Gilbert from Algonac, and Senator Roger Kahn, from Saginaw Township, both Republicans feel this moratorium is necessary to stimulate the Michigan’s housing market and spur the economy.
Here are the bills for further reading: SB 1065, HB 4215
Details can be found at 791, 790 and 4215.
I’m still not sure if this is the solution…
The better answer would be for Michigan to attract more jobs into our state.
As I Realtor who has been selling and marketing home in the Ann Arbor, Saline, Washtenaw County Area for 13 years, I rarely have a client not decide on a home based on the taxes. When it does come up, it is in Saline City, which has much higher taxes than the Townships surrounding it like Lodi, Saline Township, York Township, Pittsfield Township.
Start your new home search here.
Hi Missy~
Thanks for the run-down ...I'm going to pass this on to my cousins who live in Michigan and-may not have the details you've provided. Much appreciated.
Missy, one of the things that is appealing to quite a few folks around here is if the county is a reciprocal county, the seller can take their tax on the old home to the new home. That helps especially for situations like you were mentioning where you might want to downsize.
I would think that in your state, older homeowners don't move very often due to this? True or not?
Goodness...I'm with you Missy. The economy in Michigan is NOT going to turn around until people feel secure in their jobs AND there are new jobs created to keep our best & brightest from leaving the state.
Missy,
I take it that this has not become law yet. Am I correct in thinking that? Or does it have to pass the house too?
Gena, this is one reason Proposal A was passed to stop the rise in taxes on peoples homes ( the elderly ) who don't move much. They would pay off their homes yet their taxes would keep rising.
Russ, it has passed both House and Senate with different details, so now they will come together and hammer out a compromise. Somewhere between 18-33 months, but I think it will pass. MAR has been lobbying hard for it.
Terry, ditto.
Bill, yes your right, that's why I'm still in my own home.
Leigh, I know it's confusing, just like when I read other states ways of assessing. Florida I could never figure out.
Kris, yes the bottom line is we need more jobs to replace the ones lost through the Big 3 restructing.
AJ, that is a very interesting concept. What if they stay in the same county and downsize?
Missy,
'Spot' assessments are illegal in Pennsylvania...only improvements made and County-wide assessments can raise assessments! Thanks, Fran
Larry, you also have no state income tax ! And yes I am one of those that wants to retire in TN. My assistant already owns a home in Franklin.
Fran, our assessments are by city, townships, county, state. All together one bill but divided out.
Wow Missy.........that is something I've never heard about. That is amazing stuff. A pop up tax....wow! It just goes to show you.........Arizona is still a great place to live! ;-) Our taxes are some of the lowest, and our weather is beautiful! ;-)
Great information for your readers. Good job!