LANSING – Today, State Representative Andy Dillon (D-Redford) introduced the Real Estate Stimulus Initiative which will allow buyers of residential homestead properties to inherit the seller's taxable value for as long as they own the home if they purchase their home prior to January 1, 2008.
The initiative is designed to stimulate the real estate market by making housing more affordable. "It will benefit first-time buyers looking for starter homes and senior citizens who are looking to downsize." Dillon said. The savings can be considerable. For example, under this legislation, the statewide average savings to a purchaser of a home valued at $225,000 could be as much as $3,405 over a 10 year period. Examples of potential savings in other communities include: Detroit ($7,230), Livonia ($3,690) and Warren ($4,295). These estimates are based upon the assumption that the seller held the property since 1996.
When people purchase homes they also buy furnishings and other home improvements, so there should be a significant impact to our economy akin to the zero percent financing initiated by GM after 9/11." Dillon added.
For communities that have Headlee Roll Backs, there will be little or no impact to local revenues. Communities that do not have Headlee Roll Backs will suffer some loss of revenue. To address this, the state transfer tax will be increased by 0.10% during the 18-month window and the proceeds will be rebated to local governments. The forecasted savings were calculated after deducting the temporary increase in the state transfer tax.
Preliminary indications are that due to the anticipated increase in real estate transactions, the School Aid Fund will receive increased revenues during the first two years due to the fact that the state transfer tax revenues are paid into the SAF.