Governor Jennifer Granholm, Michigan’s lame duck Governor, in her final days in office had an opportunity to pass a bill beneficial to new homeowners across the State. Instead, she chose to veto Senate Bill 77 (aka SB 77) yesterday on the 21st of December.
The bill has not gotten much press coverage, and certainly was not one of the most high profile pieces of legislation coming from Lansing recently, but it was perhaps the most significant bill that would have been of benefit to new home buyers in the coming years ahead.
SB 77 began development in January of 2009, and went through several changes in committee and passed both the house and Senate on December 3rd, and it was presented to the Governor on December 15th. The bill provided for changes in the filing of the Michigan Principle Residence Exemption, which currently homeowners can file for once a year in May.
The Principle Residence Exemption (also known as the Homestead Exemption) essentially gives a tax break in favor of homeownership on property taxes, and reduces ones property taxes annually by approximately 40%.
Under current law, if you bought a home in June, and the principle residence exemption
was expired, you can not renew it until the following May. That means than new home buyers are required to pay the full property taxes on their new home for one year. This difference in property taxes can often mean the difference in whether they can afford the monthly payments or can qualify for the home with their lenders guidelines.
The new bill proposed changes to the law that allowed for homes in the foreclosure process to allow a bank or credit union to file a form that retained the principle residence exemption for a period of 3 years. Because a great many homes on the marketplace are foreclosures, this would allow a new homeowner purchasing a foreclosure to retain the homestead exemption if they purchase the property.
Additionally the language of the bill covering homeowners who perhaps moved and are trying to sell their home that read: “If an owner is eligible for and claims an exemption for that owner’s current principal residence, that owner may retain an exemption for not more than 3 tax years on property previously exempt as his or her principal residence if that property is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose by filing a conditional rescission form prescribed by the department of treasury on or before May 1 with the local tax collecting unit.”
The Michigan Association of Realtors had hopes that the Governor would sign the bill, as it clearly benefited homebuyers, and the general consensus on the hill in Lansing was that it would be favorable to the Governor. Apparently it was not, and she chose to veto the legislation on December 21st. You can see the progress of the bill here.
I will refrain from commenting on Governor Granholm’s decision in this matter. However, I will note to homeowners that in January we have a new Governor, Mr. Rick Snyder. There will also be a lot of new faces in both the State House and Senate, so perhaps this issue will be brought through the process again under his administration.