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Homestead      

 Michigan.

 Principal Residence Exemption (PRE).

When you purchase a home that was previously used as a rental or second home (Non-Homestead), the tax bill you inherit from the seller will indeed be higher. Once you file your paperwork to claim it as your primary residence (Homestead), your taxes will typically decrease by about 25% to 35%.

Here is the breakdown of how the math works and how to make sure you get the discount.

1. How much will they go down?

The "Homestead" status removes the 18-mill School Operating Tax. In simple terms, a "mill" is $1 of tax for every $1,000 of your home's taxable value.

  • The Math: If your home has a Taxable Value of $100,000 (meaning a market value of roughly $200,000), having the Homestead exemption saves you **$1,800 per year** ($100,000 x .018).
  • Percentage Wise: Since total millage rates in Macomb County usually range from 35 to 55 mills, removing 18 mills represents a very significant drop in your total bill.

2. The "Uncapping" Trap (Warning)

While the Homestead exemption makes your taxes lower than a Non-Homestead property, your taxes may still go up overall in the first year after purchase.

  • Why? In Michigan, when a property is sold, the Taxable Value "uncaps" and jumps up to match the current Assessed Value (50% of the market value).
  • The Result: Even with the 18-mill discount, if the previous owner lived there for a long time and had a very low "capped" taxable value, your new bill at the current market value might still be higher than what they were paying.

3. How to Claim the Lower Rate

The tax status does not change automatically. You must file a specific form with your local city or township assessor:

hese guidelines provide an overview of the Principal Residence Exemption (PRE), including common scenarios and key information to help you understand eligibility, filing, and administration.
  1. Principal Residence Exemption Background
  2. Ownership Requirement
  3. Occupancy Requirement
  4. Disqualifying Factors
  5. Claim Requirements
  6. Adjoining or Contiguous Principal Residence
  7. Partial Principal Residence Exemption
  8. Conditional Rescission
  9. Denial Of a Principal Residence Exemption and Appeals
  10. Taxes And Interest Owed from a Principal Residence Exemption Denial
  11. Waiver of Interest Process
  12. Qualified Error Principal Residence Exemption Request