LANSING – House Speaker Andy Dillon (D-Redford) today unveiled 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 package is designed to jumpstart Michigan's economy by increasing home sales, and it has the added benefit of creating stronger communities by empowering more of our residents to buy homes of their own," Dillon said. "Consumers who spend less on their homes have more money to spend on big-ticket items, such as furniture and appliances, which pumps more money into the local economy. This plan will bring relief to consumers, help jumpstart the real estate industry and boost our economy."
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.
"As we struggle to get Michigan back on track, we must support our residents who have lost their jobs to outsourcing and downsizing," said House Majority Floor Leader Steve Tobocman (D-Detroit). "For most people, their home is their primary asset. Losing both a home and a job is devastating. While Michigan's economic slump is temporary, losing the house that your family calls home is permanent. We must fight to ensure that homeowners are protected until they can get back on their feet."