LANSING – State Representative Bob Constan (D-Dearborn Heights) today threw his support behind the House Democrats' Homeowner Protection and Stimulus Plan, a package of bills that will help jumpstart Michigan's home sales market by suspending the so-called "pop-up tax" and protect residents from losing their homes when they lose their jobs to outsourcing or downsizing.
"This plan will help rejuvenate Michigan's real estate market and our economy," Constan said. "It also will help more people afford homes of their own, which will help build stronger communities. This is the right thing to do to get Michigan back on the road to recovery."
The House Democrats' plan will eliminate the so-called pop-up tax for Michigan residents who buy a house during the next 18 months. Residents who purchase a home during this window will not have to pay the pop-up tax for as long as they own the home. Under the plan, a home buyer could save up to $1,513 on the purchase of a $100,000 home or up to $3,405 on a $225,000 home, based on statewide average tax rates.
Currently, the assessed taxable value of a home may increase annually by either 5 percent or the rate of inflation, whichever is lower. When the property is sold or transferred, however, its assessment is uncapped and the home is taxed based on its State Equalized Value. This drastic re-assessment creates a pop-up tax that puts a strain on home buyers; in some cases, the pop-up tax doubles the amount of taxes a new homeowner must pay. The pop-up tax especially affects seniors who have lived in their homes for decades and young families who are trying to get started in life.
House Democrats also are developing a plan that will protect homeowners who have lost their jobs to outsourcing or downsizing from also losing their homes. Under the plan, eligible residents would receive assistance to make their mortgage and tax payments for six months. The assistance would be funded by a second mortgage on the residence. The state would form a public-private partnership with lenders to facilitate the program.
"Many of our working families are struggling to make ends meet in these tough economic times, especially as our workers' jobs are outsourced to other states and countries," Constan said. "Anyone who has lost a job to outsourcing or downsizing knows how devastating it can be. We must protect our workers who have lost their jobs from also losing their homes. Supporting our workers in tough times is the right thing to do."