I mentioned in my blog post “How Are My Property Taxes Determined?”,that Michigan’s General Property Tax Act (GPTA) allows an owner to “exempt” the local school district tax from their primary residence. Known as the “Principal Residence Exemption” or PRE, this saves about 40% on average, in total property tax burden each year. Second homes, vacation homes, investment homes, etc. are not eligible for this exemption.

An owner can typically carry only one PRE at any given time.

YOU WANT A LOOPHOLE? HERE’S AN EXCEPTION

Under the GPTA, a Michigan homeowner can claim only one PRE.

HOWEVER, there is a way for a married couple to claim TWO exemptions…as long as they each file separate income tax returns, and each spouse individually owns and occupies separate principal residences. Both residences can be anywhere in Michigan… or one can be in Michigan and the other in another state that allows for a similar exemption.

The most typical scenario is where a husband and wife own residences in different states. There are many “burden of proof” hoops to jump through, but the rumor that “we have to be legally separated” isn’t true… and over time, the tax savings can be huge.

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