LANSING – State Representatives Fred Miller (D-Mount Clemens) and Steve Bieda (D-Warren) today voted in support of a bill designed to help jumpstart Michigan's home sales market by eliminating the so-called "pop-up tax" for 18 months. The bill passed on a vote of 77 to 31; it now heads to the Senate.
"For too many people, the pop-up tax springs out as an unpleasant surprise," Miller said. "It's a burden for homebuyers. We need to make homeownership as affordable as possible. By doing this, we strengthen our communities around the state, block by block."
The 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 homebuyer 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.
"This plan jumpstarts Michigan's real estate market, which is what we need in these tough economic times," Bieda said. "Rejuvenating the housing market will help strengthen our economy."
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. In some cases, the pop-up tax doubles the amount of taxes a new homeowner must pay.
"When homebuyers spend less money buying their home, they have more money to spend fixing up their homes — from purchasing appliances to home improvements," Miller said. "That provides a real boost to the economy."
"Owning a home is part of the American Dream, and House Democrats are leading the way in helping as many residents as possible make that dream a reality," Bieda said. "This plan will help build a stronger Michigan and get our state moving in the right direction."