LANSING – State Representatives Richard LeBlanc (D-Westland) and Marc Corriveau (D-Northville) today unveiled the Homeowner Protection and Stimulus Plan, a package of bills that will help jumpstart Michigan's home sales market by suspending the so-called "pop-up tax" and protect residents from losing their homes when they lose their jobs to outsourcing or downsizing.
"Many seniors are hit hard by the pop-up tax when they sell the family home they've owned for years to move to a smaller, more manageable home," LeBlanc said. "The increase in taxes can sometimes make such a move impossible. Eliminating the tax will help our seniors living on fixed incomes, and also will help our young families who are trying to get started in life by making houses more affordable."
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.
"This plan will give Michigan's economy a much-needed shot in the arm by helping to increase home sales," Corriveau said. "Empowering our residents to buy new homes is the best way to increase long-term investment in our communities. It also will pump more money into our economy and help get Michigan back on track."
The Michigan House also is working to develop a plan that will protect homeowners who have lost their jobs to outsourcing or downsizing from also losing their homes. Under the plan, eligible residents would receive assistance to make their mortgage and tax payments for six months. The assistance would be funded by a second mortgage on the residence. The state would form a public-private partnership with lenders to facilitate the program.