Bill would extend duration of property tax exemption in some cases
Elderly and disabled individuals seeking a poverty property tax exemption from their communities won't have to re-apply each year for the exemption under a bill advanced 5-0 by a Senate panel Wednesday.
The bill would allow communities to extend the duration of a poverty tax exemption on a principal residence to three years for people on a fixed public assistance income or people with permanent physical or mental disabilities. To be eligible for the exemption, individuals would need to show proof they own and occupy the home.
The legislation advances to the full Senate floor next.
The extension is especially important in places like Detroit, where 100 to 200 people are walking into city hall to fill out paperwork to renew the poverty exemption amid the pandemic, Mayor Mike Duggan told senators Wednesday.
"We have an online process, but we tend to have the oldest and least internet-connected group who need this," Duggan said.
For an 80-year-old with an exemption, it makes no sense for them to come in each year to show their income levels haven't changed, let alone to make them do so during a pandemic, Duggan said.
"Give us the option to give them three-year exemptions," Duggan said. "We'll evaluate how it goes. They still have obligations and penalties if they abuse it."
Under the legislation, if a person was found later to be ineligible for exemption, the individual would be subject to repayment of tax with interest.
For properties exempt in 2019, 2020 or both, the exemption would remain in place through 2021 if the local governing body adopted a resolution to allow for as much.
The bill would extend through 2023, Sen. Stephanie Chang, D-Detroit, said Wednesday. But she also expressed interest in making it permanent.
The most common property tax in the state, the principal residence exemption, stays in place year after year without requiring a property owner to reapply, said Michele Oberholtzer, director of tax foreclosure prevention at United Community Housing Coalition.
There are mechanisms to audit and rescind principal residence exemptions if needed, but "we don’t place the burden on homeowners to reapply year after year," Oberholtzer said. That same courtesy could be extended to the poverty exemption, she said.
"It is not charity," she said. "It is good for all residents to have these stable neighborhoods.”