The youtube video above of the Washtenaw County Treasurer
explains the Pop Up Tax and Who Benefits
explains the Pop Up Tax and Who Benefits
Michigan’s property tax laws cap the amount by which a home’s taxable value can grow from year to year at 5 percent or the rate of inflation, whichever is less. This means that for many homeowners, there are two very different measures of what their home is worth.
1. what the real estate market says (market value) and
2. what the tax system says (taxable value)
2. what the tax system says (taxable value)
In a booming real estate market, the 5 percent cap makes taxable value smaller than market value, creating a gap between the (smaller) amount of value you’re taxed on and the (bigger) amount your home is actually worth.And the longer you own your home, the bigger that gap becomes.
When the house is sold, the gap between taxable value and market value goes away. The new homebuyer may see a property tax hike.
Andy Meisner suggests making the tax cut temporarily transferable. Under Meisner’s bill, HB 4440 , if the seller got a tax break in his last year in a home, the buyer should get to keep that tax break for his first 18 months in the home. But sales of new homes could be hurt because they do not get preferential treatment.
The Senate has its own bill which gives a tax credit to home buyers to offset the effect of the pop up tax for a 33 month period, retroactive to April 1. They would raise the income cutoff for eligibility for the state’s property tax credit from $73,650 to $83,650. The homestead property tax credit changes from $1200 to $1300.
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