Michigan Principal Residence Exemptions (PRE)

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Michigan Senate Moves Bill to Allow for Principal Residence Exemptions (PRE) Until June 30th

Over the past several weeks Michigan Realtors® has worked with the Legislature and the Department of Treasury to allow additional time for buyers to file their Principal Residence Exemption (PRE) for 2020. With the traditional deadline expiring this past Monday, June 1st, Michigan Realtors® is urging expedited movement on this important legislation to provide buyers with property tax relief and the greatest amount of certainty during the month of June.

Today, the Michigan Senate passed Senate Bill 940, sponsored by Senator Roger Victory (R- Hudsonville) extending the time frame to file a 2020 PRE until June 30th. With the overwhelming support of the Senate and work with the Department of Treasury, it is anticipated that the bill will see continued movement in the Michigan House next week.

While there are no certainties, Realtors® should advise their buyer closing in the month of June to file their PRE before June 30th in order to receive the PRE rate for their July property tax bill.

What is a Principal Residence Exemption (PRE)?

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.

What this means to a homebuyer: If you close on a property in the month of June and file for the Michigan Principal Residence Exemption by June 30th, your summer tax bill will be lower due to the PRE.

Have questions about this subject, or any other real estate related topics, I’m always available to talk with you!

Dani

How Property Taxes Can Impact Your Mortgage Payment

How Property Taxes Can Impact Your Mortgage Payment | MyKCM

When buying a home, taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area?

When applying for a mortgage, you’ll see one of two acronyms in your paperwork – P&I or PITI – depending on how you’re including your taxes in your mortgage payment.

P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and they’re all important factors to calculate when you want to determine exactly what the cost of your new home will be.

TaxRates.org defines property taxes as,

“A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”

This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.How Property Taxes Can Impact Your Mortgage Payment | MyKCMThe top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin. The states with the lowest median property taxes are Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.

Bottom Line

Depending on where you live, property taxes can have a big impact on your monthly payment. To make sure your estimated taxes will fall within your desired budget, let’s get together today to determine how the neighborhood or area you choose can make a difference in your overall costs when buying a home.

Thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”.

Dani