What is the Principal Residence Exemption?

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What is the Principal Residence Exemption – or PRE?

Cut your taxes!

To quote the State of Michigan the PRE:

“exempts a residence from the tax levied by a local school district for school operating purposes up to 18 mills. Section 211.7cc and 211.7dd of the General Property Tax Act, Public Act 206 of 1893, as amended, addresses PRE claims. To qualify for a PRE, 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.”

What this means to you is that the tax bill in which the taxes for the local school operating expenses becomes significantly cheaper.  a secondary residence or investment property is not eligible for this credit.  Most of the counties in Michigan are now collecting for the school operating expenses in the Summer taxes – but not all of them!

This tax exemption is already in place on most homes and by filing a Principal Residence Exemption application at closing continues this exemption, but Buyers need to be aware that in many cases today, homes have lost this tax exemption due to the home being foreclosed upon.  If you are not working with me as a Buyer’s Agent – then please make sure you inquire of your agent whether the property currently has this exemption on it.  It will make a huge difference in the amount of money you will need for closing costs.

 

 

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