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Tuesday, April 1st, 2008 This week's headlines... • Senate Acts on "Pop Up" Tax Relief |
Senate Acts on "Pop Up" Tax Relief Today, the Michigan Senate took action in passing legislation that aims to stimulate the housing industry in Michigan. The Senate Economic Stimulus Plan gives a boost to the housing industry by providing property tax relief, while putting more money back into the homeowner’s pocket. It does so by offering a window for homebuyers to receive a refundable income tax in the amount of the pop-up tax now and for the duration of their homeownership. The Senate package (SB 1065, 790, 791, HB 4215, ) alleviates the issue of homeowners who continue to lose equity in their homes, while allowing potential homebuyers to move forward with the dream of homeownership without financial penalties. Senator Jud Gilbert (R-Algonac) and Senator Roger Kahn (R-Saginaw Twp) spoke on the Senate floor today and stressed the importance of “pop up” tax relief in order to boost Michigan’s housing market while spurring the economy. Details of the legislation include:
You may recall that a similar package was introduced in the House last year, which implemented an 18-month moratorium on the “pop up”. The Senate plan creates a 33-month window, starting April 1st, 2008 and continuing to January 1st of 2011, for prospective homebuyers to lock in the plan. The plan includes principal residences only. It works by providing an income tax credit to reimburse homebuyers for any “pop up”. Those homeowners with no income tax liability would still receive a check from the State for that “pop up” amount. Jeff Young, 2008 President of the Michigan Association of REALTORS® said, “While the House and Senate plans differ in their mechanics, we are confident that both sides will come together and work to provide aid to homeowners and homebuyers. This will give Michigan’s economy a much needed shot in the arm. I’m extremely pleased that both House Speaker Dillon and Senate Majority Leader Bishop are working on much needed relief. It is obvious that both the House and Senate understand the important economic role the housing market plays. This is a historic time for homebuyers, and it’s a great time to buy.” The "pop-up" tax is the common name for the uncapping of property taxes that occurs upon the transfer of property. The uncapping is a result of the 1994 Michigan Constitution amendment known as Proposal A. In short it is the difference between the current owner's taxable value and the new taxable amount a buyer will pay on the state equalized value of the home. Under Proposal A, a property's taxable value is capped at an increase of the rate of inflation or 5%, whichever is less, thus keeping a homes value artificially low for tax purposes. When the property is transferred, the cap comes off and the new owner begins paying property taxes on the state equalized value of the home, not the previous owner's taxable value. This uncapping has become known as the "pop-up tax." Because Michigan property values outpaced the rate of inflation since 1994, the state equalized value of many homes is significantly higher than their taxable value (about 30-35% higher statewide). Over the years this significant increase in tax liability has become a detriment to a person's buying power. The "pop-up" has the effect of prohibiting seniors from downsizing, pricing younger families out of older markets, forcing development into rural areas, and has taken away an incentive to purchase new homes. Please Participate in REALTORS® Survey The Michigan Association of REALTORS® MLS Exploratory Task Force has retained Jerry Matthews, Advisor, to conduct a confidential survey. The survey will be emailed to you through Zoomerang from Jerry Matthews. The email contains a unique link which can only be used once. The purpose of the survey is to gather information about how Michigan's REALTORS® access and use MLS data. A primary focus is the ease of use, efficiency and satisfaction with the MLS system's functions and structure. MAR is pleased to offer its members the opportunity to join the MAR, members only Facebook Group. Already over 160 members have taken advantage of Facebook’s networking opportunities. Below are just a few of the many benefits of joining. Share Photos. As a member of MAR’s Facebook Group, you have the opportunity to view MAR’s event photos, as well as add your own to the MAR album. Members also have the chance to make comments on photos, which interest them. Discussions. Post a discussion at the MAR Group page, and see how others feel about different issues. Current discussion topics include MAR advertising, challenges for MAR and the benefits of RPAC. This is a great way to express opinions and receive feedback. Post Your Links. Take advantage of Facebook’s “Posted Items” area, and post links that may be relevant to other members. Videos. Although no one in the MAR Group has utilized this feature, be one of the first! Post interesting or relevant videos at the MAR Group page, so others can view and comment. Stay tuned for more benefits of Facebook. MAR Publications Available for Download Online Good news! Michigan REALTOR® Magazine and the REALTOR® Advocate newsletter are always available to read online. If you can’t seem to find an old copy or need to print a past article, the online publications archives are at your disposal 24 hours a day. Both publications boast an excellent reputation and continue to be a resource long after they publish. MAR is always striving to inform members, and archived publications are just another way to keep you connected to MAR. Michigan REALTOR® magazine won an MSAE Award in 2007 and is quickly becoming the preferred resource for information in the industry. The REALTOR® Advocate newsletter is an excellent resource for members who are active in RPAC and governmental affairs. To access the archives please visit http://www.mirealtors.com/news/marpubs.html, With the help of McClelland & Anderson, we are taking the most commonly asked questions from our legal hotline and putting them in e-news. We will be featuring a different question each issue. QUESTION: I am a broker who wants to get into property management. Can I use my existing trust account for property management funds or should I set up a separate account? ANSWER: A broker should set up a separate property management account, which may be an interest-bearing account. Section 339.2512c(3) of the Occupational Code states: A property management account may be an interest-bearing account or instrument, unless the property management employment contract provides to the contrary. The interest earned on a property management account shall be handled in accordance with the property management employment contract. Take 10% off Your Entire Order at the REALTOR.org Store The REALTOR.org Store has everything you need to enhance your knowledge of the real estate industry. From DVD’s to books and brochures, The National Association of REALTORS® provides you with a plethora of resources that cannot be found anywhere else. Above all, the store provides convenient ways to place orders. Visit the store online, and make your purchases with the click of a mouse, or simply call and order your product over the phone; both ways will result in fast shipping, and the option to return. The Michigan Association of REALTORS® wants to help you save money on the tools you need. As a MAR member, you are entitled to 10 percent off your entire REALTOR.org Store purchase. Simple type in the promotional code MI2 and the amount will automatically be discounted. You can also apply the promotional code to phone and fax orders. It really is that easy to save money, and with this simplicity, there is no reason not to use the code and save! Visit the REALTOR.org Store at www.realtor.org/store to view available products. Don’t forget to use your discount by typing in MI2 at checkout!
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