PRE RETENTION UPON OWNER'S DEATH S.B. 78:
SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 78 (as introduced 1-31-17)
CONTENT
The bill would amend the General Property Tax Act to allow a person to retain the principal residence exemption (PRE) on inherited property for up to two years, without using the property as a principal residence and in addition to claiming the PRE on other property.
Under the Act, a principal residence is exempt from the taxes levied by a local school district for school operating purposes under Section 1211 of the Revised School Code (which typically are 18 mills). A homeowner may claim one principal residence exemption by filing an affidavit with the local tax collecting unit, and the affidavit must state that the property is owned and occupied as a principal residence by the owner.
Under the bill, beginning December 31, 2017, if an owner were related to a decedent within the first degree by blood or affinity, the owner would be allowed to retain an exemption on property conveyed to him or her by will or intestate succession (inheritance in the absence of a valid will), if the property had previously been exempt as the decedent's principal residence in the immediately preceding tax year. The property would have to be for sale and could not be occupied, leased, or used for any business or commercial purpose. If these conditions were met, the owner could retain the PRE for up to two years.
(The Act's definition of "owner", for purposes of the PRE, includes a person who owns property as a result of being a beneficiary of a will or trust or as a result of intestate succession.)
To retain the exemption, the owner would have to file a conditional rescission form prescribed by the Department of Treasury with the local tax collecting unit, within the time period for filing an affidavit claiming the PRE. (The Act requires an owner to file an affidavit by June 1 for the upcoming summer tax levy and all subsequent tax levies, or by November 1 for the upcoming winter tax levy and all subsequent tax levies.) The owner also would have to file a property transfer affidavit with the appropriate assessing office within 45 days of the transfer of ownership.
The PRE for property conveyed to an owner by will or intestate succession under these circumstances would be in addition to an exemption for property for which the owner was eligible and claimed a PRE as his or her principal residence.
The bill would take effect 90 days after its enactment.
MCL 211.7cc Legislative Analyst: Drew Krogulecki
FISCAL IMPACT
The bill would increase State School Aid Fund expenditures by an unknown, and likely negligible, amount. The actual increase would depend on the number of properties affected, as well as their specific characteristics. Local school district revenue would not be affected because, while the bill would reduce revenue to local school districts, that reduction would be offset by an equal increase in School Aid Fund expenditures in order to maintain per-pupil funding guarantees.
Fiscal Analyst: Elizabeth Pratt
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.