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Assessing / Treasury - Exemptions

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1. When I claim an exemption on my new residence, what happens to the exemption on the residence I sold?

The exemption on your old home remains in effect until December 31 of the year your home is sold. If you move to your new residence before your first home is sold, the exemption expires on December 31 of the year you move out. You must rescind the homestead exemption within 90 days of the date you no longer own or occupy the property as your principal residence. You may rescind your exemption on the Request to Rescind/Withdraw Homestead Exemption Form (Form 2602) at closing. If your agent did not provide you with Form 2602, you can pick one up at city hall.

2. I am moving into a new home and converting my current home to a rental property in November. Do I have to rescind the exemption on my current home?

Yes, within 90 days of moving. The exemption will remain in place until December 31 of the year the use is changed from your principal residence to a rental property.

3. What happens when a lender has foreclosed on a mortgage and the home is now vacant?

The lender must rescind the homestead exemption using the Request to Rescind/Withdraw Homestead Exemption Form (Form 2602). If you need a Form 2602 you can pick on up at city hall.

4. I own two homes in Michigan. For which home do I claim the exemption?

Claim the exemption for the home you occupy as your principal residence.

5. I have a home in Michigan and in another state. May I claim an exemption on my Michigan home?

You must be a Michigan resident to claim this exemption. You may claim your Michigan home only if you own it and occupy it as your principal residence. You may not have more than one principal residence.

6. May renters file for this exemption?

No. You must own your principal residence to claim an exemption for it.

7. My children own my home, but I hold a life estate. May I claim the exemption?

Yes. Complete the affidavit using your name, address, social security number, and signature. Your children should not sign the affidavit.

8. I am leasing my home with an option to buy. May I claim my home?

No. Leasing with an option to buy is considered a rental arrangement, so the home is ineligible. When you exercise the option to buy, you may claim an exemption.

9. I live in a nursing home but still maintain a home that I eventually plan on returning to. May I claim an exemption on the home I own?

Yes, unless the home is rented to another person.

10. I own the lot adjoining and contiguous to my home, and it has a different property identification number than the parcel on which my homestead is located. (See more)

I own the lot adjoining and contiguous to my home, and it has a different property identification number than the parcel on which my homestead is located. May I also claim an exemption on this property?

You may claim an exemption on this property as long as the property claimed is adjoining or contiguous to your home. A road does not break contiguity. File an affidavit for each parcel.

11. I live in part of my home and operate a business in another part. May I claim an exemption?

Yes, but only on the portion of the property that is your home. You may claim the partial exemption even if the property is classified as commercial.

12. I rent a room in my home to a boarder. May I still claim an exemption?

Yes. If more than 50% of your home is used as your principal residence, you may claim an exemption for your entire home. If you use 50% or less of your home as a principal residence, a percentage of your home that you occupy will be used.

13. I own a duplex and I live in one of the units. My father lives in the other unit but does not pay rent. May I claim an exemption on both units?

You may claim an exemption only on the unit you occupy as your principal residence even if there is an adjoining entrance between the units.

14. My accountant tells me that I do not qualify for a homestead, should I still file it?

Accountants often confuse the Principal Residence Exemption Affidavit with the "Homestead Property Tax Credit". These are 2 separate filings. The Principal Residence Exemption Affidavit is filed with your city or township and can reduce the school portion of a homeowner's property tax bill; if they qualify. While the "Homestead Property Tax Credit" relates to the filing of your yearly income tax return with the State of Michigan and has nothing to do with your eligibility for reduced property taxes on your home.

15. What is a Principal Residence Exemption Affidavit, and why do I have to file it?

Every person in Michigan is allowed to claim a Homestead on their primary residence which reduces the tax rate by 18 mils per thousand on their tax bill. In order to enjoy the lower tax rate, you must own and occupy the residence for which you are claiming.

16. Can I make a Request to Rescind?

A homeowner who has claimed a Principal Residence Exemption on a property and sells that property or converts the home to another use (i.e. rental property) must rescind the exemption they maintained when the property was owned and occupied as a primary residence in accordance with the laws of the State of Michigan. If it is determined that a property was claimed as a Principal Residence when in fact it was not, the owner may be subject to additional property taxes, penalty, and interest.

17. Can I have dual homestead if I am selling my house?

Yes, you will need to fill out the Conditional Rescission of Principal Residence Exemption (PRE), which enables a person who has established a new principal residence to retain a PRE on property previously exempt as the owner's principal residence. The conditional rescission allows an owner to receive a PRE on his or her current Michigan property and on previously exempted property simultaneously if certain criteria are met. An owner may receive the PRE on the previous principal residence for up to three years if that property is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose.

18. How do I know it my business qualifies for the Eligible Personal Property Tax Exemption?

As long as the personal property is worth less than $80,000, that property may qualify for the exemption.

19. How does the Veteran Property Tax Exemption work?

The Disabled Veterans' Exemption reduces the property tax liability on the principal place of residence of qualified veterans who, due to a service-connected injury or disease, have been rated 100% disabled or are being compensated at the 100% rate due to unemployability.

20. What is the Poverty Exemption?

MCL 211.7u provides for a property tax exemption, in whole or part, for the principal residence of persons who, by reason of poverty, are unable to contribute to the public charges. In order to receive a poverty exemption, a taxpayer must annually file a completed application form, and all required additional documentation, with the supervisor, assessor, or the Board of Review where the property is located.