Homeowner's Principal Residence Exemption
The Homeowner's Principal Residence Exemption is a product of the property tax reforms put in place by the legislature in 1994, generally known as Proposal A. The Principal Residence Exemption excuses the residential owner-occupied property from 18 mills of the total millage levied as property tax. The purpose is to relieve taxpayers of a portion of the burden of funding public schools. Eligibility is for primary residences only. Second homes, cottages and rental properties are not eligible and must pay the full millage -- as do all commercial and industrial properties.
When you purchase a home (either new construction or an existing home), you must claim the exemption in order to receive it. When you sell your home or change its use, you must rescind the exemption.
- HOMEOWNER'S PRINCIPAL RESIDENCE EXEMPTION AFFIDAVIT (Form 2368) is the form used to claim an exemption for your primary residence. To be eligible you must own and occupy the home. If you are claiming an exemption for a property that was not exempt for the previous tax year, the filing deadline is May 1. Exemptions in effect on January 1 stay in effect for the calendar year.
- REQUEST TO RESCIND/WITHDRAW HOMEOWNER'S PRINCIPAL RESIDENCE EXEMPTION (Form 2602) is the form to use if you have sold your home or have changed its use (converted it to rental property, commercial use, or you have moved out but the property is not yet sold.) Recissions become effective January 1 following the change of use of the property.
- FARMLAND EXEMPTION (Form 2599) is to be used if the property is used primarily for agricultural purposes but is not classified as agricultural. If your home is located on this property, and you have already filed a Principal Residence Exemption, it is not necessary to file this form.
- CONDITIONAL RESCISSION OF PRINCIPAL RESIDENCE EXEMPTION (Form 4640) If a property owner has moved to a new house in Michigan, has a PRE on the new property, the old property is vacant and for sale, the PRE on the old property can be retained for up to three years while for sale.
If you fail to file a Principal Residence Exemption when your property is eligible, you will pay too much tax. If you fail to rescind the exemption when the property no longer qualifies, you could be billed for additional taxes, penalty and interest by the state, county or local treasurer.
Title companies generally make these forms available to buyers and sellers at the closing. The title company usually handles mailing the forms to the assessor as well. However, it is in your best interest to be certain that the assessor receives these forms! All of the above-mentioned forms are also available in the assessor’s office, or by clicking on the links above, or they can be downloaded from the State of Michigan’s website.