MOUNT CLEMENS – State Representatives Frank Accavitti (D-Eastpointe), Steve Bieda (D-Warren), Fred Miller (D-Mount Clemens) and Lisa Wojno (D-Warren) today unveiled the House Democrats' Homeowner Protection and Stimulus Plan, a package of bills that will help jumpstart Michigan's real estate market by suspending the so-called "pop-up tax" and protect residents from losing their homes when they lose their jobs due to outsourcing or downsizing.
"By giving more of our residents the power to buy their own homes, this plan boosts the economy while building stronger communities," Accavitti said. "Whether you're talking about empty nesters moving into a more affordable home or a young couple starting a family, this plan will help people realize the American dream."
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.
"Consumers will have more to spend on big-ticket items such as furniture when they spend less on their home," Bieda said. "That will help pump more money into Michigan's struggling economy."
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.
"In order for Michigan's economy to get back on track, we need creative solutions to ensure that our communities remain strong and our workers are protected," Wojno said. "This proposal is one of many that House Democrats are promoting to make that happen."
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 this mortgage assistance program.
The number of foreclosures in Macomb County nearly tripled last year — jumping to a staggering 8,192 foreclosure filings — according to a recent report by the firm RealtyTrac.[1]
"Hard-working Michigan residents who lose their jobs to downsizing or outsourcing need our help," Miller said. "It's difficult enough, especially in these tough economic times, to lose a job. We must fight to protect homeowners from the double whammy of losing a job and a home."
[1] Witsil, Frank. "The number of metro Detroiters at risk of losing their homes skyrockets," Detroit Free Press, Jan. 24, 2007.