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Seasonal Homes and the Michigan Principal Residence Exemption

The Michigan Court of Appeals recently ruled in favor of a municipality which denied a property owner’s petition for a “principal residence exemption” (“PRE”).  Under Michigan’s PRE, also known as the “homestead exemption,” a principal residence property can be exempted from the property tax levied by a local school district for school operating purposes.  To apply the PRE, a person must be a Michigan resident who owns and occupies the property as a principal residence.  Michigan statute defines “principal residence” as “the 1 place where an owner of the property has his or her true, fixed, and permanent home to which, whenever absent, he or she intends to return and that shall continue as a principal residence until another principal residence is established.”


In this new court decision, Estate of Schubert v Department of Treasury, a property owner occupied a home in Ludington seasonally.  To support her request for the PRE, the homeowner submitted documents such as tax refunds, vehicle titles, and her Michigan ID card as evidence that the seasonal property was her true, fixed, and permanent home and residence.  Both the Michigan Tax Tribunal and the Court of Appeals rejected the documents as conclusive evidence of “principal residence,” instead relying on the owner’s driver’s license, tax returns, and voter registration which identified other residences owned and occupied by her.  Accordingly, the Court of Appeals ultimately denied the PRE.


Schubert demonstrates the heavily fact dependent nature of PRE cases.  As such, land owners residing at more than one residence must take care to appropriately establish one property as their true, fixed, and permanent home such that it qualifies as a “principal residence.”
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