Tom sells his Ann Arbor home where he has claimed the Principal Residence Exemption (PRE) for five years. He moves to a rental apartment after closing. Which of the following actions is Tom required to take regarding the PRE?
Correct Answer
D) Tom must file a rescission of the PRE with the local assessor after the sale
Under MCL 211.7cc(4), when a property owner no longer uses a property as their principal residence — including upon sale — they are required to file a rescission of the PRE with the local assessor. The PRE is NOT automatically terminated; the seller must affirmatively file a rescission form (Form 2602). Failure to rescind can result in the seller being liable for the additional taxes, interest, and penalties that should have applied to the property.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
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