Principal Residence Exemption
From Mary Mitchell, Emmet County Treasurer:
A Principal Residence Exemption (PRE) exempts a residence from the tax levied by a local school district for school operating purposes up to 18 mills. To qualify for a PRE, a person must be a Michigan resident who owns and occupies the property as a principal residence. The PRE was at one time called the Homestead Exemption and was often confused with the Homestead Property Tax Credit, which is filed annually with your Michigan Individual Income Tax Return. The PRE is a separate program. Click here to go to the State of Michigan PRE information.
Another function my office has taken on is the PRE Audit. I have chosen to do the PRE audit ourselves rather than have the State audit our taxpayers. We go through the tax roll and look for properties that are claiming a questionable Primary Residence Exemption. We also receive referrals from other residents questioning someone’s PRE. We first send a letter to the property owner assuming that there is some reason for the discrepancy. In many cases they respond and clear up the confusion.
However, many people do not respond at all. We are required to deny those that we are unable to substantiate. The denied parcels are billed at a statutory rate of 1.25% interest per month from the date the taxes would have first been delinquent. When the bills are paid, we distribute the school taxes to the various schools and the local collecting unit. The interest we collect is split between the local unit, the State and the County. Regardless who does the audit, the mandated interest amount is the same, but because we conduct our own, the majority of the interest stays in Emmet county.
FAQs on PREs
Why did I get a PRE Denial?
We mailed a letter requesting documentation to verify that you owned and occupied the property as your principal residence. Either no response to that letter was received, or the response received did not verify that the property was your principal residence for the year(s) being denied.
How do I appeal a denial of a PRE?
Submit your appeal in writing to the Residential Small Claims Division, Michigan Tax Tribunal, P.O. Box 30232, Lansing, MI 48909 within 35 days of the denial. Include a copy of the denial, state the reason(s) you disagree with the denial, and provide documentation showing you owned and occupied the property as your principal residence for each year denied.
What is acceptable verification of occupancy and Michigan residency to show I am entitled to the exemption?
Copies of at least four different pieces of documentation for each of the years being appealed. Some examples of acceptable documents that show the property was occupied as the principal residence of the owner for the year(s) in question are:
Both sides of your driver’s license with property address.
Your voter’s registration record.
A statement from a bank, charge account, medical billing, utility bills, etc. (Only the portion showing your mailing address and date need to be submitted.)
Property tax bill with the property as the mailing address.
Copy of your passport.
Your income tax return showing the mailing address. (Black out any sensitive information.)
NOTE: This is not an all inclusive list and no one item is particularly controlling.
How long will the appeal process take?
It may take several months to complete the review of the appeal.
Do I have to pay the additional taxes before I can appeal?
No. Taxes do not have to be paid at the time of the appeal. However, penalty and interest will continue to accrue. If your appeal is not successful and the denial is upheld, the penalty and interest will be charged from the original due date of the taxes.
Can I make a partial payment?
Most counties and local units require full payment. Emmet County does allow partial payments. Any funds received will first be applied to penalties and interest. The remainder of taxes owed will continue to accumulate interest and could end up in foreclosure.
Where can I find more information about PREs?
Information regarding PREs can be found at http://www.michigan.gov/taxes. Click on “Property Tax” on the left and then “Principal Residence Exemption” on the left.