A Break for Home Buyers?

Back in 1994, under the Proposal A property tax changes, property values for tax purposes were capped at inflation or 5%, whichever is lower, until the property is sold. When the property sells, it's not unusual for the new buyer to be facing increased taxes from what the previous owner had paid. The reason for this is that property becomes 'uncapped' upon transfer.

One of the effects of this is to discourage many people from selling and buying another home, knowing that their taxes are presently low, but after moving their taxes will be much higher. Even seniors who have much more house than they need, often opt to stay put instead of moving to something smaller just because they'll likely have a larger tax bill even in a smaller house.

The bill that's now before Lansing is to put a moratorium on this 'uncapping' for a period of 18 months after the sale. This could mean significant savings for a home buyer. The idea behind this proposal is to 'jump-start' home sales. Many buyers would be anxious to buy during this window of opportunity, and when real estate sales are strong, so goes our economy in this State.

I'll be keeping track of the progress on this proposal and let you know when I know more!