Michigan Associated Realtors-supported legislation to allow foreclosed properties to retain their principal residence exemption for a period of up to 3 years has passed both the House and Senate, and is expected to be signed by the Governor in the coming days.
Senate Bill 77 provides for much needed Principal Residence status and tax relief to purchasers of bank-owned properties after the May 1st filing deadline. This legislation has become particularly important since foreclosures, which are non-principal residences, have flooded Michigan's real estate market in recent years. The current situation prices buyers out of homes by forcing them to qualify for a mortgage at the higher tax rate. Those buyers looking to purchase foreclosed properties are consequently stuck with a significant tax burden for the remainder of the year despite making that new purchase their principal residence. This bill would alleviate that burden by allowing a buyer to immediately make a foreclosed property their principal residence.
The MAR Public Policy staff met with legislators on this bill until the very last hours of the 2010 session to express the importance of making this tax-friendly legislation a priority. We are pleased that legislators on both sides of the aisle supported the passage of this bill, which gives homebuyers significant tax relief when purchasing a foreclosed property.