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Thursday, April 10, 2008

Every Little Bit Helps...

On Tuesday of this week, Governor Granholm signed a significant piece of real estate legislation. The legislation enables home sellers to retain 2 principal resident exemptions for property still on the market after the seller has moved elsewhere in the state. The signing of this legislation is a huge step in aiding struggling sellers who have had homes on the market for over a year and have lost their principal residence status on that property.

House Bill 4215, now Public Act 96 of 2008 enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:

- the property is not occupied,
- the property is for sale
- the property is not leased or available for lease
- the property is not used for any business or commercial purpose

The Michigan Association of REALTORS® (MAR) was active in pointing out to lawmakers that the struggling economy in Michigan has forced several home sellers to relocate to other areas of the state, in some instances continuing to market a home that they have not lived in for over a year. As a result, the home was no longer treated as a principle residence and the homeowner lost the principal residence exemption.

Retention of an existing homestead credit for an unoccupied home that is currently for sale would offer relief to sellers who have had to relocate for whatever reason. This is just another small, but helpful step taken by the state government to help struggling home sellers. The while issue of homes going "Non-Homesteaded" on the tax rolls while people tried to sell them was becoming a major block for new buyers. The differences were often as much as 30-40% on the taxes, which was enough to stop many buyers, if they were faced with having to pay the increased rate for most of a year, before the house could be re-homesteaded.

The bill doesn't protect those who have moved out of state, but I guess the legislature can't protect everyone. Many of those people don't report their moves, so they play "catch me, if you can" with the law now anyway. Every little bit helps.

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