By John McNew, Giarmarco Mullins & Horton PC
During the depths of the housing crisis, the Michigan Legislature passed Public Act 494 of 2012 to assist home builders holding excess inventories of “development property” (a term defined in the PA 494) in various states of construction. PA 494 was phased in over a one-year period. Beginning December 31, 2013, eligible development property is exempt from taxes levied by the local school district for school operating purposes to the same extent provided a principal residence for either (a) three years, or (b) until the property is no longer eligible development property. See the General Property Tax Act—Act 206 of 1893.
“Eligible development property” is (a) a residential dwelling, condominium unit, or other residential structure that was new construction after December 30, 2012, including (b) the land on which that residential dwelling, condominium unit, or other residential structure is located, if the property meets all of the following conditions: (i) is not occupied and has never been occupied; (ii) is available for sale; (iii) is not leased; and (iv) is not used for any business or commercial purpose. The construction does not need to be complete to qualify for the exemption. See the Department of Treasury Bulletin 24 of 2013 regarding PA 494 of 2012.
To take advantage of the exemption, the owner must fill out Form 5033 and submit it to the local assessor. The assessor must determine if the property is eligible within fourteen days. If at any time the property, or a portion of the property, does not meet the requirements, the owner must file a rescission within 90 days. Assuming a school operating millage of 18 mills, the owner/developer stands to save $1,800 per year per $100,000 of assessed value. Builders and developers, particularly of high value residential construction, should consider utilizing the 211.7ss exemption.