So how do Michigan property taxes work? To explain Michigan property taxes is not easy. But to break it down there are 2 ways Michigan properties are taxed. The are either homestead or non-homestead taxes.
Michigan Homestead taxes - if you live in the property as your primary residence you get a reduction in your Michigan property taxes
Michigan Non-homesteaded property taxes - If the property is a commercial property, an investment property, a vacation home, or a rental property you pay full amount of taxes.
A primary residence is defined as the home as you come back to when you go away.
When you buy a home you will get a homestead exemption form from the title company. You will have to fill it out at the closing and sign it. After closing you have to take the form down to the city you have bought the house in. They will take the form and “grant” you the homestead exemption. You will get the reduced homestead taxes.
You can only claim one Michigan home as your primary residence and get the homestead exemption. If you are married you can only claim one too. Your wife CAN NOT claim another home as her primary residence and get the homestead exemption.
It is fraud to do so. If you claim a property that is not your primary residence or claim multiple property you will be liable for penalty and interest.
So the bottom line is if you are going to buy a Michigan home and live in it, you will fill out the Principal Residence Exemption (PRE) Affidavit and get a reduced tax rate. The form will be part of the closing.
I wish explaining how Michigan property taxes work was easy, but it is going to take a few different blogs to fully explain it all. If you have any questions feel free to call me.
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