New Property Tax “Uncapping” Exemption Will Help Keep Your Home, Vacation Property or Cottage in the Family
Michigan has a new law, Public Act 310 of 2014, which has expanded the transfer of residential property to and from certain family members, trusts and probate estates, without causing the taxable value of the property to be “uncapped”. This is great news for families wanting to keep long held houses, vacation homes, cottages and recreational land in the family without the economic hardship from a substantial increase in property taxes.
Normally, whenever there is a transfer of ownership of real property, the taxable value of the property is “uncapped” to allow the taxable value to increase to 50% of the property’s market value. In the past, this has made it difficult to keep vacation homes, cottages and recreational property in the family because when the property was transferred, there could be a substantial increase in property taxes, depending on how long the property had been previously held and how much the market value of the property had increased over time.
For the uncapping exemption to apply, the new law requires the property must be used as residential property and the transfer of the property must be within the group of the following family members: Spouses; Parents, including parents of a spouse; Siblings, including siblings of a spouse; Children, including adopted children and children of a spouse; and Grandchildren, including grandchildren of a spouse.
In addition, the new law provides that residential property transfers to and from certain trusts that have the same, above described, family members as beneficiaries, are not subject to “uncapping”.
The new law provides more options for planning transfers of property without having family members and beneficiaries to pay the high costs of “uncapping”. Contact attorney Bill Ager at agerlawoffice.com or (734) 649-0784 to learn more about how this new law can work for you and your family in property transfers and estate planning.