The Principal Residence Homestead Exemption Looms…

The deadline to file your Principal Residence Homestead Exemption is May 1st so our Resident Friendly Reminding Agent Shannon Jones asked me to remind you to either get to filing or get to buying.

Here’s the deal.

Regardless of how many properties you own, you are allowed only ONE exemption and you claim it on the one which you consider your principal residence. So if you own a cabin on the lake in Northern Michigan or rental houses in addition to your primary residence, you get to only claim that tax break on your residence. What if your time is spent equally 6 months here and 6 months there? Doesn’t matter – pick one as your principal residence and file the Homestead Exemption.

Why does it matter whether or not you file?

You won’t get in trouble or anything, but you will pay significantly higher taxes. The Principal Residence Homestead Exemption lowers your property taxes by approximately 35-40%.

Who needs to pay attention to this?

If you recently purchased a  home, it was discussed at your closing, and you SHOULD have filed it by now.  We  know how shouldas work though. So this friendly reminder is for you if you forgot. Once the deadline passes, it doesn’t matter when you bought the house, you can’t file until next May.

If you’re in the process of shopping for a home right now, this deadline is crucial, especially in this foreclosure driven market. Many of the homes on the market right now are owned by banks – since these are not “primary residences” -they are either now, or will revert back to, non homestead rates as the deadline passes.

The 35-40% property tax increase associated with not filing your Principal Residence Homestead Exemption in time will make a significant difference in your mortgage payment and in many cases will be a deal breaker in whether or not you qualify for the home of  your dreams.

With only a few weeks left to  meet that deadline, you have to buy RIGHT NOW to even have a chance of closing on time.  So what you waiting for? Why aren’t you looking at houses right now?

If you do miss the deadline in buying and closing in time, keep in mind  that many homes for sale that are owned by a homeowner rather than a bank are likely to still be filed as homestead because they are a principal residence to someone, and that homestead status stays with the house when you buy it. This is important when considering the prices of properties for sale as you shop.