On April 8, 2008, former Governor Granholm signed an amendment to the law that enables a person who has established a new principal residence to keep a Principal Residence Exemption (PRE) on property previously exempt as the owner’s principal residence. The conditional rescission allows an owner to receive a PRE on his or her current Michigan property and on previously exempted property simultaneously for up to three years if the old property:
- Is not occupied;
- Is for sale; and
- Is not leased and is not used for any business or commercial purpose.
To initially qualify for a conditional rescission, the owner must submit a Conditional Rescission of Principal Residence Exemption, Form 4640 to the assessor for the city or township on or before June 1 (beginning with the summer tax levy) or November 1 (beginning with the winter tax levy) of the first year of the claim.
The owner must annually resubmit this form on or before December 31 to verify to the assessor that the old property still meets the above requirements (that is, it is not occupied, is for sale, and is not leased or used for any business or commercial purpose).
When filling out Form 4640:
- Check the “Initial Request” box if this is the first year of the conditional rescission (on or before June 1 or November 1 of the year of the claim).
- Check the “Second Year Annual Verification” box if verifying the property still complies with the conditional rescission requirements for the second year (on or before December 31 of the year prior to the second year).
- Check the “Third Year Verification” box if verifying the property still complies with the conditional requirements for the third year (on or before December 31 of the year prior to the third year).
- Provide the applicable tax year of the conditional rescission.
For example, if you purchase a new home and close on October 1, 2019, on the Form 4640 you would check the “Initial Request” box and enter tax year 2019. In the same example, to retain a PRE for a second year, resubmit this form by December 31, 2020, check the “Second Year Annual Verification” box, enter tax year 2020 and verify the conditional requirements are met for the second year.
You must submit Form 4640 again by December 31, 2021 to retain a PRE for a third year, check “Third Year Annual Verification” box, enter tax year 2021, and verify the conditional requirements are met for the third year.
If the owner does not annually verify to the assessor, or the assessor finds the property does not meet these conditional requirements, the assessor will deny the PRE on that property (and your taxes will go up because the home is no longer considered your principal residence).
For those interested in actually reading the law (not most of you, but a few I’m sure), it is House Bill 4215, enacting Public Act 96 of 2008, which amended 211.7cc of the General Property Tax Act, Public Act 206 of 1893.