Monday, March 19, 2007

The "Pop-Up Tax"

Representative Andy Meisner introduced legislation for Speaker Dillon’s proposed 18 month moratorium on tax uncapping upon real estate transfers, otherwise known as the “Pop-up Tax.” House Bills 4440 and 4441, introduced last week in the Michigan House, represent a vision for boosting Michigan’s economy and its housing market. The House Democrats held a press conference earlier this week to roll out their plan. House Bill 4440 passed out of the House Commerce Committee early Tuesday. House Bill 4441 is expected to be taken up later this week in House Tax Policy committee.
The Michigan Association of Realtors is concerned about the cliff at the end of the 18 months, and is working closely with legislative leadership in both the House and the Senate on the community ratio plan to ease the prospective drop off in activity. Currently, the Senate Republican Majority supports the idea of a moratorium, but is working on a long term proposal as well. I will continue to update you with any news or progress.

Tuesday, March 13, 2007

Proposed Tax Break for Homebuyers

There's a proposed tax break in Lansing that may help our real estate market. Lawmakers are discussing an 18-month moratorium on stepping up the taxable value and the taxes when a residence sells. What happens presently is that when you buy a resale home, it may have fairly low taxes because of several or many years of capping the taxable value. Typically, upon transfer, the taxable value is stepped up to 50% of the sale price, thus causing a sometimes very significant increase in taxes that the new homeowner must pay.

What is being proposed is to retain the present taxable value on the residence for the first 18 months of ownership by the new owner. This change would apply to any home purchase agreement since March 1, 2007 and before September 1, 2008. Keeping the taxable value cap could mean significant savings for a home buyer. This proposal has the potential to really boost our sagging real estate sales, and when real estate is selling well, that boosts the entire economy.

I'll be watching this development, and will report when I hear more!