HOUSE BILL NO. 4306
March 21, 2023, Introduced by Reps. Outman, Zorn, Slagh, DeSana, Johnsen, Rigas, Meerman
and Posthumus and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 27a (MCL 211.27a), as amended by 2016 PA 375.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 27a. (1) Except as otherwise provided in this section,
2 property shall must be assessed at 50% of its true cash value under
3 section 3 of article IX of the state constitution of 1963.
4 (2) Except as otherwise provided in subsection (3), for taxes
5 levied in 1995 and for each year after 1995, the taxable value of
6 each parcel of property is the lesser of the following:
7 (a) The One of the following, as applicable:
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1 (i) Before the effective date of the amendatory act that added
2 subparagraph (ii), the property's taxable value in the immediately
3 preceding year minus any losses, multiplied by the lesser of 1.05
4 or the inflation rate, plus all additions. For taxes levied in
5 1995, the property's taxable value in the immediately preceding
6 year is the property's state equalized valuation in 1994.
7 (ii) On and after the effective date of the amendatory act that
8 added this subparagraph, the property's taxable value in the
9 immediately preceding year minus any losses, multiplied by the
10 lesser of 1.05, the inflation rate, or the rolling average
11 inflation rate, plus all additions.
12 (b) The property's current state equalized valuation.
13 (3) Upon a transfer of ownership of property after 1994, the
14 property's taxable value for the calendar year following the year
15 of the transfer is the property's state equalized valuation for the
16 calendar year following the transfer.
17 (4) If the taxable value of property is adjusted under
18 subsection (3), a subsequent increase in the property's taxable
19 value is subject to the limitation set forth in subsection (2)
20 until a subsequent transfer of ownership occurs. If the taxable
21 value of property is adjusted under subsection (3) and the assessor
22 determines that there had not been a transfer of ownership, the
23 taxable value of the property shall must be adjusted at the July or
24 December board of review. Notwithstanding the limitation provided
25 in section 53b(1) on the number of years for which a correction may
26 be made, the July or December board of review may adjust the
27 taxable value of property under this subsection for the current
28 year and for the 3 immediately preceding calendar years. A
29 corrected tax bill shall must be issued for each tax year for which
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1 the taxable value is adjusted by the local tax collecting unit if
2 the local tax collecting unit has possession of the tax roll or by
3 the county treasurer if the county has possession of the tax roll.
4 For purposes of section 53b, an adjustment under this subsection
5 shall must be considered the correction of a clerical error.
6 (5) Assessment of property, as required in this section and
7 section 27, is inapplicable to the assessment of property subject
8 to the levy of ad valorem taxes within voted tax limitation
9 increases to pay principal and interest on limited tax bonds issued
10 by any governmental unit, including a county, township, community
11 college district, or school district, before January 1, 1964, if
12 the assessment required to be made under this act would be less
13 than the assessment as state equalized prevailing on the property
14 at the time of the issuance of the bonds. This inapplicability
15 continues until levy of taxes to pay principal and interest on the
16 bonds is no longer required. The assessment of property required by
17 this act applies for all other purposes.
18 (6) As used in this act, "transfer of ownership" means the
19 conveyance of title to or a present interest in property, including
20 the beneficial use of the property, the value of which is
21 substantially equal to the value of the fee interest. Transfer of
22 ownership of property includes, but is not limited to, the
23 following:
24 (a) A conveyance by deed.
25 (b) A conveyance by land contract. The taxable value of
26 property conveyed by a land contract executed after December 31,
27 1994 shall must be adjusted under subsection (3) for the calendar
28 year following the year in which the contract is entered into and
29 shall must not be subsequently adjusted under subsection (3) when
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1 the deed conveying title to the property is recorded in the office
2 of the register of deeds in the county in which the property is
3 located.
4 (c) A conveyance to a trust after December 31, 1994, except
5 under any of the following conditions:
6 (i) If the settlor or the settlor's spouse, or both, conveys
7 the property to the trust and the sole present beneficiary or
8 beneficiaries are the settlor or the settlor's spouse, or both.
9 (ii) Beginning December 31, 2014, for residential real
10 property, if the settlor or the settlor's spouse, or both, conveys
11 the residential real property to the trust and the sole present
12 beneficiary or beneficiaries are the settlor's or the settlor's
13 spouse's mother, father, brother, sister, son, daughter, adopted
14 son, adopted daughter, grandson, or granddaughter and the
15 residential real property is not used for any commercial purpose
16 following the conveyance. Upon request by the department of
17 treasury or the assessor, the sole present beneficiary or
18 beneficiaries shall furnish proof within 30 days that the sole
19 present beneficiary or beneficiaries meet the requirements of this
20 subparagraph. If a present beneficiary fails to comply with a
21 request by the department of treasury or assessor under this
22 subparagraph, that present beneficiary is subject to a fine of
23 $200.00.
24 (d) A conveyance by distribution from a trust, except under
25 any of the following conditions:
26 (i) If the distributee is the sole present beneficiary or the
27 spouse of the sole present beneficiary, or both.
28 (ii) Beginning December 31, 2014, a distribution of residential
29 real property if the distributee is the settlor's or the settlor's
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1 spouse's mother, father, brother, sister, son, daughter, adopted
2 son, adopted daughter, grandson, or granddaughter and the
3 residential real property is not used for any commercial purpose
4 following the conveyance. Upon request by the department of
5 treasury or the assessor, the sole present beneficiary or
6 beneficiaries shall furnish proof within 30 days that the sole
7 present beneficiary or beneficiaries meet the requirements of this
8 subparagraph. If a present beneficiary fails to comply with a
9 request by the department of treasury or assessor under this
10 subparagraph, that present beneficiary is subject to a fine of
11 $200.00.
12 (e) A change in the sole present beneficiary or beneficiaries
13 of a trust, except under any of the following conditions:
14 (i) A change that adds or substitutes the spouse of the sole
15 present beneficiary.
16 (ii) Beginning December 31, 2014, for residential real
17 property, a change that adds or substitutes the settlor's or the
18 settlor's spouse's mother, father, brother, sister, son, daughter,
19 adopted son, adopted daughter, grandson, or granddaughter and the
20 residential real property is not used for any commercial purpose
21 following the conveyance. Upon request by the department of
22 treasury or the assessor, the sole present beneficiary or
23 beneficiaries shall furnish proof within 30 days that the sole
24 present beneficiary or beneficiaries meet the requirements of this
25 subparagraph. If a present beneficiary fails to comply with a
26 request by the department of treasury or assessor under this
27 subparagraph, that present beneficiary is subject to a fine of
28 $200.00.
29 (f) A conveyance by distribution under a will or by intestate
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1 succession, except under any of the following conditions:
2 (i) If the distributee is the decedent's spouse.
3 (ii) Beginning December 31, 2014, for residential real
4 property, if the distributee is the decedent's or the decedent's
5 spouse's mother, father, brother, sister, son, daughter, adopted
6 son, adopted daughter, grandson, or granddaughter and the
7 residential real property is not used for any commercial purpose
8 following the conveyance. Upon request by the department of
9 treasury or the assessor, the sole present beneficiary or
10 beneficiaries shall furnish proof within 30 days that the sole
11 present beneficiary or beneficiaries meet the requirements of this
12 subparagraph. If a present beneficiary fails to comply with a
13 request by the department of treasury or assessor under this
14 subparagraph, that present beneficiary is subject to a fine of
15 $200.00.
16 (g) A conveyance by lease if the total duration of the lease,
17 including the initial term and all options for renewal, is more
18 than 35 years or the lease grants the lessee a bargain purchase
19 option. As used in this subdivision, "bargain purchase option"
20 means the right to purchase the property at the termination of the
21 lease for not more than 80% of the property's projected true cash
22 value at the termination of the lease. After December 31, 1994, the
23 taxable value of property conveyed by a lease with a total duration
24 of more than 35 years or with a bargain purchase option shall must
25 be adjusted under subsection (3) for the calendar year following
26 the year in which the lease is entered into. This subdivision does
27 not apply to personal property except buildings described in
28 section 14(6) and personal property described in section 8(h), (i),
29 and (j). This subdivision does not apply to that portion of the
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1 property not subject to the leasehold interest conveyed.
2 (h) Except as otherwise provided in this subdivision, a
3 conveyance of an ownership interest in a corporation, partnership,
4 sole proprietorship, limited liability company, limited liability
5 partnership, or other legal entity if the ownership interest
6 conveyed is more than 50% of the corporation, partnership, sole
7 proprietorship, limited liability company, limited liability
8 partnership, or other legal entity. Unless notification is provided
9 under subsection (10), the corporation, partnership, sole
10 proprietorship, limited liability company, limited liability
11 partnership, or other legal entity shall notify the assessing
12 officer on a form provided by the state tax commission not more
13 than 45 days after a conveyance of an ownership interest that
14 constitutes a transfer of ownership under this subdivision. Both of
15 the following apply to a corporation subject to 1897 PA 230, MCL
16 455.1 to 455.24:
17 (i) A transfer of stock of the corporation is a transfer of
18 ownership only with respect to the real property that is assessed
19 to the transferor lessee stockholder.
20 (ii) A cumulative conveyance of more than 50% of the
21 corporation's stock does not constitute a transfer of ownership of
22 the corporation's real property.
23 (i) A transfer of property held as a tenancy in common, except
24 that portion of the property not subject to the ownership interest
25 conveyed.
26 (j) A conveyance of an ownership interest in a cooperative
27 housing corporation, except that portion of the property not
28 subject to the ownership interest conveyed.
29 (k) Notwithstanding the provisions of section 7ee(5), at the
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1 request of a property owner, an assessor's establishment of a
2 separate tax parcel for a portion of a parcel that ceases to be
3 qualified agricultural property but is not subject to a land
4 division under the land division act, 1967 PA 288, MCL 560.101 to
5 560.293, or any local ordinance. For purposes of this subdivision,
6 a transfer of ownership occurs only as to that portion of the
7 parcel established as a separate tax parcel and only that portion
8 shall must have its taxable value adjusted under subsection (3) and
9 shall be is subject to the recapture tax provided for under the
10 agricultural property recapture act, 2000 PA 261, MCL 211.1001 to
11 211.1007. The adjustment under subsection (3) shall must be made as
12 of the December 31 in the year that the portion of the parcel
13 established as a separate tax parcel ceases to be qualified
14 agricultural property. A portion of a parcel subject to this
15 subdivision is considered a separate tax parcel only for those
16 purposes described in this subdivision.
17 (7) Transfer of ownership does not include the following:
18 (a) The transfer of property from 1 spouse to the other spouse
19 or from a decedent to a surviving spouse.
20 (b) A transfer from a husband, a wife, or a married couple 1
21 or both spouses creating or disjoining a tenancy by the entireties
22 in the grantors or the grantor and his or her the grantor's spouse.
23 (c) Subject to subdivision (d), a transfer of that portion of
24 property subject to a life estate or life lease retained by the
25 transferor, until expiration or termination of the life estate or
26 life lease. That portion of property transferred that is not
27 subject to a life lease shall must be adjusted under subsection
28 (3).
29 (d) Beginning December 31, 2014, a transfer of that portion of
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1 residential real property that had been subject to a life estate or
2 life lease retained by the transferor resulting from expiration or
3 termination of that life estate or life lease, if the transferee is
4 the transferor's or transferor's spouse's mother, father, brother,
5 sister, son, daughter, adopted son, adopted daughter, grandson, or
6 granddaughter and the residential real property is not used for any
7 commercial purpose following the transfer. Upon request by the
8 department of treasury or the assessor, the transferee shall
9 furnish proof within 30 days that the transferee meets the
10 requirements of this subdivision. If a transferee fails to comply
11 with a request by the department of treasury or assessor under this
12 subdivision, that transferee is subject to a fine of $200.00.
13 (e) A transfer through foreclosure or forfeiture of a recorded
14 instrument under chapter 31, 32, or 57 of the revised judicature
15 act of 1961, 1961 PA 236, MCL 600.3101 to 600.3285 and MCL 600.5701
16 to 600.5759, or through deed or conveyance in lieu of a foreclosure
17 or forfeiture, until the mortgagee or land contract vendor
18 subsequently transfers the property. If a mortgagee does not
19 transfer the property within 1 year of the expiration of any
20 applicable redemption period, the property shall must be adjusted
21 under subsection (3).
22 (f) A transfer by redemption by the person to whom taxes are
23 assessed of property previously sold for delinquent taxes.
24 (g) A conveyance to a trust if the settlor or the settlor's
25 spouse, or both, conveys the property to the trust and any of the
26 following conditions are satisfied:
27 (i) If the sole present beneficiary of the trust is the settlor
28 or the settlor's spouse, or both.
29 (ii) Beginning December 31, 2014, for residential real
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1 property, if the sole present beneficiary of the trust is the
2 settlor's or the settlor's spouse's mother, father, brother,
3 sister, son, daughter, adopted son, adopted daughter, grandson, or
4 granddaughter and the residential real property is not used for any
5 commercial purpose following the conveyance. Upon request by the
6 department of treasury or the assessor, the sole present
7 beneficiary or beneficiaries shall furnish proof within 30 days
8 that the sole present beneficiary or beneficiaries meet the
9 requirements of this subparagraph. If a present beneficiary fails
10 to comply with a request by the department of treasury or assessor
11 under this subparagraph, that present beneficiary is subject to a
12 fine of $200.00.
13 (h) A transfer pursuant to a judgment or order of a court of
14 record making or ordering a transfer, unless a specific monetary
15 consideration is specified or ordered by the court for the
16 transfer.
17 (i) A transfer creating or terminating a joint tenancy between
18 2 or more persons if at least 1 of the persons was an original
19 owner of the property before the joint tenancy was initially
20