Homestead vs Non-homestead Tax / Principal Residence Exemption.
October 5, 2017
Many consider the move to Traverse City because of all the advantages that a lifestyle Up North has to offer. Financial considerations of market value projections and the tax ramifications weigh heavy with an investment in MI real-estate. A vacation home, a rental property investment in a hot market or perhaps the purchase becomes your new primary residence; Any real estate investment strategy needs clarification on tax ramifications. Here is a link from Michigan state with information to consider regarding Homestead exemptions:
Taxes - Homestead Property Tax Credit Information - State of Michigan
You may claim a property tax credit if all of the following apply beginning 2012: Your homestead is in Michigan. You were a resident of Michigan for at least six months during the year. You own or are contracted to pay rent and occupy a Michigan homestead on which property taxes were levied.
A Principal Residence Exemption (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.