NEW MICHIGAN LAW FOR TRANSFERRING RESIDENTIAL PROPERTY WITHOUT UNCAPPING PROPERTY TAX

On December 31, 2013 a new Michigan law, MCL 211.27a(7)(s), took effect which allows for a transfer of residential property between relatives of the 1^st degree without uncapping property tax values. The new law is essentially an exemption to what constitutes a transfer of ownership for purposes of uncapping property tax values.

This means that residential property transfers can be made from a parent to a child, child to parent, or to a spouse or to parents of a spouse without uncapping the property tax values and paying more property taxes . It is important to note that the transfer must involve residential property and the transferred property must be used as residential property after the transfer.

This new law will be particularly beneficial to persons who want to pass on family vacation homes, cottages, recreational land as well as principal residences, to their children without also passing on the burden of higher property taxes.