State property tax exemption for poverty modified

State property tax exemption for poverty changed

THE BIG POINTS – Changes that affect how local units, audit boards and appraisers deal with the exemption from state property tax poverty from tax year 2021 will find their way to city councils and local governments.

The exemption provides a portion of property tax exemption if a landowner complies with the guidelines of Poverty Release Act MCL 211.7u and the changes involve localized adoption.

“This is really a codification of what we have already done,” said Debra Peck Lichtenberg, director of agriculture and operations at Farms, “making it more transparent and accessible to our residents who may be eligible for a tax break.”

Under Public Law 253 of 2020, which went into effect on December 23, the State Tax Commission recently issued these guidelines for implementation, including the city councils adopting updated guidelines, guidelines and application forms which should then be posted on the city’s website.

“This is really the only subject that is not dealt with consistently across the state of Michigan,” said Doug Shaw, managing partner of WCA Assessing, the five-point scoring firm. “Everyone had different filings, policies, and procedures. This is a great opportunity to make everyone consistent. That way, taxes are the same across the state of Michigan.”

The most important change that Michigan communities can decide on individually is the income threshold for a qualified applicant. Since the majority of the municipalities adhered to the poverty standards of the previous year, the Grosse Pointes each chose the same path. Therefore, the household income must be below the poverty line for the number of people in the household. Under the 2020 guidelines, the poverty line is $ 12,760 for one person and $ 4,480 for each additional person in the household.

With this in mind, the maximum assets are also specified in the federal poverty guidelines, in which total assets, apart from income and housing, must not exceed the threshold for the number of people in the household.

While the municipalities previously used a formula to determine the reduction, the new legislation only provides reduction options for 100 percent, 50 percent or 25 percent. With the average reduction over the past three years in several municipalities, all five points have now also set a general reduction factor of 50 percent.

Among the procedural changes, the examination board may, for compelling reasons or special circumstances, such as B. significant debts for medical bills, no longer deviate from the guidelines.

“There were too many exceptions that were kind of vague … (and) allowed deviations from the guidelines and it wasn’t explained,” Shaw said. “This gives clear reasons why poverty is granted.”

If the carryover option is not applied, those who are eligible in one year will have to reapply the five points the next year.