A principal residence is exempt from the tax levied by a local school district for school operating purposes if an owner meets the requirements to claim a Principal Residence Exemption (“PRE”) as stated by the General Property Tax Act (“GTPA”). MCL 211.7cc(2) of the GTPA states in part:
"[A]n owner of property may claim 1 exemption under this section by filing an affidavit . . . . The affidavit shall state that the property is owned and occupied as a principal residence by that owner of the property on the date that the affidavit is signed and shall state that the owner has not claimed a substantially similar exemption, deduction, or credit on property in another state."
The PRE was at issue in Rentschler v Township of Melrose where a homeowner rented his home for more than 14 days each year for three consecutive years and applied for a PRE for the same time period. His local township denied his PRE for two reasons. First, the township claimed the property at issue was not the owner’s principal residence. Second, the township claimed that the owner’s employment was out of state and the property was rented for part of the year. The owner appealed the decision to the MI Tax Tribunal.
In his appeal to the tax tribunal, the owner presented proofs that during the time period in question he was registered to vote at the property address, and the property address was also listed on his driver’s license and tax returns. He also stated that he had not claimed a similar exemption on any other property in another state. Nevertheless, the Tribunal found in favor of the township relying on the MI Department of Treasury PRE Guidelines which state: “[I]f an owner rents his property for more than 14 days a year, the property is not entitled to a principal residence exemption.” The owner appealed the tribunal’s decision to the Court of Appeals.
The Court of Appeals reversed the Tax Tribunal’s decision finding that “Michigan PRE guidelines do not have the force of a legal requirement” and because the owner had satisfied each of the PRE requirements (property owned and occupied as principal residence, and no similar exemption claimed on property in another state), he was entitled to the PRE for the period at issue.
The published decision is Rentschler v Township of Melrose, Court of Appeals Case No. 336333 decided November 28, 2017.
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