LANSING – State Representative Andy Coulouris (D-Saginaw) 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.
"Especially in these tough economic times, we need to make homeownership as affordable as possible," Coulouris said. "By empowering more of our residents to buy their own homes, we strengthen our communities and build a stronger Michigan."
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.
"This plan jumpstarts the state's real estate market, which is what we need to strengthen our economy and get the state back on track," Coulouris said. "The plan also boosts local economies — when people spend less money buying their home, they have more to spend on big-ticket items, such as furniture and appliances."