LANSING – State Representative Bob Constan (D-Dearborn Heights) today voted in support of a bill designed to help jumpstart Michigan's home sales market by eliminating the so-called "pop-up tax" for 18 months. The bill passed on a vote of 77 to 31; it now heads to the Senate.
"Eliminating the pop-up tax will help more of our residents afford new homes and help spur the real estate market," Constan said. "Our economy needs a shot in the arm, and this plan will help deliver it. By making homeownership more affordable, we will build stronger communities, stronger schools and a stronger economy."
The 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.
"The pop-up tax hits young families and seniors especially hard," Constan said. "Eliminating the pop-up tax will allow more of our young families who are just starting out in life to get ahead. It also will ease the tax burden on our seniors who want to sell the family homes they've lived in for years to move to a smaller home that is more manageable. This is the right plan to help get Michigan moving in the right direction."