LANSING – State Representatives Mark Meadows (D-East Lansing) and Joan Bauer (D-Lansing) on Wednesday joined their Democratic colleagues in passing a bill designed to help jumpstart Michigan's home sales market by eliminating the so-called "pop-up tax" for 18 months. The bill passed on a vote of 77 to 31; it now heads to the Senate.
"Homeownership is the American dream," Bauer said. "This plan will help more of our residents afford a home, increasing the number of homeowners, which makes for stronger communities. This is the right thing to do for our citizens and the right thing to do for Michigan."
The plan will eliminate the so-called pop-up tax for Michigan residents who buy a house during the next 18 months. Residents who purchase a home during this window will not have to pay the pop-up tax for as long as they own the home. Under the plan, a home buyer could save up to $1,513 on the purchase of a $100,000 home or up to $3,405 on a $225,000 home, based on statewide average tax rates.
Currently, the assessed taxable value of a home may increase annually by either 5 percent or the rate of inflation, whichever is lower. When the property is sold or transferred, however, its assessment is uncapped and the home is taxed based on its State Equalized Value. This drastic re-assessment creates a pop-up tax that puts a strain on home buyers; in some cases, the pop-up tax doubles the amount of taxes a new homeowner must pay. The pop-up tax especially affects seniors who have lived in their homes for decades and young families who are trying to get started in life.
"There are nearly 5,000 single family, owner occupied homes for sale in the capitol area," Meadows said. "Eliminating the pop-up tax will help get those homes off the market and at the same time give a boost to our real estate industry. This is a much-needed plan to help get Michigan's economy moving in the right direction."