Buying Your Next Michigan Home Before Selling? Don't Miss This Property Tax Rule
Buying your next home before your current home sells can solve one problem, but create another.
You get the house you want without having to wait for your current home to sell, but now you temporarily own two homes.
Michigan has a property tax provision many homeowners don't know about that may help in exactly this situation.
Michigan's Conditional PRE Rule
Michigan allows certain homeowners who establish a new Michigan principal residence to temporarily retain the Principal Residence Exemption, commonly called the homestead exemption, on their previous home.
The provision is called a Conditional Rescission of Principal Residence Exemption.
If you qualify, you may receive the PRE on your new Michigan principal residence while retaining the PRE on your previous principal residence for up to three consecutive years.
That can be especially useful for move up sellers who find their next home before their current home sells.
You can read the official requirements directly from the Michigan Department of Treasury Conditional Rescission guidelines.
There Are Important Requirements
The previous home must meet all of Michigan's requirements.
It must be:
For sale
Not occupied
Not leased
Not used for business or commercial purposes
The owner must also establish and claim a new principal residence in Michigan.
Simply owning two homes does not automatically qualify you.
Homeowners seeking the exemption file Michigan Form 4640, Conditional Rescission of Principal Residence Exemption, with the assessor for the city or township where the previous property is located.
The initial filing must be made by June 1 or November 1 of the first year of the claim.
If the exemption continues into another year, the homeowner must file Form 4640 again by December 31 each year to verify that the property continues to meet the requirements.
These deadlines matter. Michigan Treasury states that missed or late filings are not allowed.
See Michigan's complete Conditional PRE rules and frequently asked questions.
Why This Matters When Planning a Move
The order in which you buy and sell can affect financing, possession, moving costs, property taxes, and your negotiating position.
This is one more reason I like to map out the entire move before putting a sign in the yard.
For example, someone who finds the right house first may have more options than simply passing on that house because their existing home hasn't sold yet.
The right strategy depends on the homeowner's finances, both properties, and the local market.
You can also see recent Southeast Michigan home sales to get a better idea of what buyers are actually paying throughout the area.
And when you're deciding where that next home should be, location deserves just as much thought as the house itself.
Watch my video, WHY Would You Buy a Home There?
Planning a Move in Metro Detroit?
If you're considering selling your current home and moving into another home in Metro Detroit, we can look at both sides of the move before you make a decision.
What could your current home sell for?
How quickly might it sell?
What would you want to buy next?
And does buying first or selling first make more sense for your particular situation?
Those are much better questions to answer before you put your house on the market.
If you're considering making a move, contact me and we'll start by looking at the numbers.
Caleb Bonderenka
SoldByCaleb.com
734-945-5948
Official Source: Michigan Department of Treasury, Conditional Rescission of Principal Residence Exemption
Property tax eligibility depends on the individual homeowner and property. Confirm eligibility and filing requirements with the local assessor or an appropriate tax professional.