Whether you’re currently a homeowner or you’re thinking about buying a home in Michigan this year, you’ve likely considered property taxes as one of the regular costs when compared to current rental pricing and your existing home situation.

Some people in Michigan ready to buy a home have been spooked out of purchasing a house in a particular neighborhood, like Royal Oak, because property tax rates “price them out” of getting a mortgage in Michigan.

There’s good news on the horizon for you though, and it has to do with the Homestead Act.  It has evolved a great deal over the years but the purpose has always remained the same – to benefit the homeowner by allowing them to pay taxes at a lower level.  The ultimate goal was to encourage home ownership.

This contrasts investors and those who rent out property as they are considered non-PRE and are taxed at a higher rate.

The next evolution of the Homestead Act has taken plane when Governor Snyder signed into law the PRE Enhancement Legislation on May 1^st of this year.  This new legislation was brought to fruition because of the growing number of vacant homes flooding the Michigan market due to foreclosures or rental properties that are now up for sale.

The new law provides homeowners with the opportunity to claim Principal Residence Exemption twice a year – prior to June 1^st and Prior to November 1^st each year.  This new law is set to take effect immediately and moves this year’s current May 1^st deadline to June 1^st.

How do homeowners benefit from this?  It translates to money.  Properties that are taxed at the non-PRE rate pay an extra 18 mills in taxes.  For home buyers trying to qualify for a mortgage, these extra tax costs could prevent you from qualifying for an otherwise affordably-priced property.

Before this legislation was put into place, home buyers had only one opportunity each year to change their PRE status, which was on May 1^st.  Now those purchasing a home or existing homeowners can reclaim their PRE and lower tax rate twice each year.  That means if you purchase your home after June, you don’t have to wait until May 1^st of the following year to reclaim your PRE.

In addition regarding foreclosures a bank now has the option of maintaining the PRE status of property by filing a Conditional Recession.  For buyers, this means you can qualify for financing on foreclosed properties at the PRE rate despite the fact that they are vacant, and you can start paying the lower tax rate as soon as you’re settled in.

This is great news for first time buyers seeking a mortgage in Michigan.  It’s also great news for the Michigan economy and could trigger an upswing in home purchases.  Now truly is the best time to buy a home in Michigan!