PRINCIPAL RES. EXEMPTION: TRUST PROP. S.B. 907:
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Senate Bill 907 (as introduced 1-24-12)
Sponsor: Senator Jack Brandenburg
Date Completed: 1-25-12
The bill would amend the General Property Tax Act to extend the principal residence exemption to property owned by a trust.
Under the Act, a principal residence is exempt from the tax levied by a local school district for school operating purposes (typically 18 mills), if the owner claims an exemption as provided in the Act.
The bill would amend the definition of "owner" to include a present beneficiary of a trust if the trust owns the property and it is the principal residence of the present beneficiary.
MCL 211.7dd Legislative Analyst: Suzanne Lowe
The bill would increase State School Aid Fund expenditures by an unknown amount. Property that qualified for the exemption as a result of the bill would no longer be obligated to pay locally levied mills for school operating purposes. (For most school districts this represents a levy of 18 mills.) Any revenue loss to the local unit would be offset by increased School Aid Fund expenditures in order to maintain per-pupil funding amounts. The actual impact would depend on the number of properties affected by the bill, as well as the specific characteristics of each property.
No data exist on the number of properties or trusts that would be affected by the bill, but in 2010 more than 64,600 Michigan trusts were required to file returns with the Internal Revenue Service. If 5% of these trusts were affected by the bill, and the average taxable value of each affected property were $100,000, exempting affected properties from the 18-mill levy would increase School Aid Fund expenditures by approximately $6.0 million per year.
The bill also would reduce State income tax revenue to the General Fund by an unknown and likely minimal amount, by increasing the number of properties that could potentially qualify for a homestead property tax credit.
Fiscal Analyst: David Zin
Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. sb907/1112