Local legislators’ bill closing tax loophole signed into law
Published 6:35 pm Monday, October 9, 2017
A new law — sponsored by state Reps. Kim LaSata and Dave Pagel — will prevent out-of-state residents from improperly claiming property tax exemptions when they buy second homes in Michigan.
The bills, signed into law Thursday by Gov. Rick Snyder, address a key issue affecting school funding in the southwest part of the state near Lake Michigan, including the regions represented by LaSata, of Bainbridge Township, and Pagel, of Berrien Springs.
“This change in state law will close a costly tax loophole that was potentially costing our local school districts millions of dollars,” LaSata said. “I am proud to sponsor this legislation that will aid school funding in southwest Michigan, and likely other areas of the state as well.”
Pagel agreed.
“We are fixing a problem that existed for far too long in Michigan,” Pagel said. “This new law prevents an improper practice that was taking money away from our schools for years.”
The legislation was introduced because some property owners intentionally declare a homestead property tax exemption on their second home in Michigan, while at the same time claiming a similar exemption on their primary residence in another state. The new Michigan law will crack down on that practice and make sure the 18-mill non-homestead levy is collected on a second home.
That money is allocated to local K-12 schools, meaning that when people exploited this loophole, schools lost potential tax revenue.
The new law makes it clear that if a property owner has claimed a principal residence exemption in Michigan while claiming a similar exemption in another state, the Michigan exemption would be rescinded. A claim for a Michigan homestead tax exemption could be denied and enforced retroactively if it is discovered the property owner had claimed a similar exemption in another state.
Intentional violators could face a misdemeanor criminal charge.
The measure is the first public act — a bill signed into law — for LaSata, who is in her first term in the Michigan House. Pagel is in his third term in the Michigan House.
