HOUSE BILL NO. 4796
June 15, 2023, Introduced by Reps. Skaggs and Morgan and referred to the Committee on
Government Operations.
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
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1 each parcel of property is the lesser of the following:
2 (a) The property's taxable value in the immediately preceding
3 year minus any losses, multiplied by the lesser of 1.05 or the
4 inflation rate, plus all additions. For taxes levied in 1995, the
5 property's taxable value in the immediately preceding year is the
6 property's state equalized valuation in 1994.
7 (b) The property's current state equalized valuation.
8 (3) Upon a transfer of ownership of property after 1994, the
9 property's taxable value for the calendar year following the year
10 of the transfer is the property's state equalized valuation for the
11 calendar year following the transfer.
12 (4) If the taxable value of property is adjusted under
13 subsection (3), a subsequent increase in the property's taxable
14 value is subject to the limitation set forth in subsection (2)
15 until a subsequent transfer of ownership occurs. If the taxable
16 value of property is adjusted under subsection (3) and the assessor
17 determines that there had not been a transfer of ownership, the
18 taxable value of the property shall must be adjusted at the July or
19 December board of review. Notwithstanding the limitation provided
20 in section 53b(1) on the number of years for which a correction may
21 be made, the July or December board of review may adjust the
22 taxable value of property under this subsection for the current
23 year and for the 3 immediately preceding calendar years. A
24 corrected tax bill shall must be issued for each tax year for which
25 the taxable value is adjusted by the local tax collecting unit if
26 the local tax collecting unit has possession of the tax roll or by
27 the county treasurer if the county has possession of the tax roll.
28 For purposes of section 53b, an adjustment under this subsection
29 shall must be considered the correction of a clerical error.
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1 (5) Assessment of property, as required in this section and
2 section 27, is inapplicable to the assessment of property subject
3 to the levy of ad valorem taxes within voted tax limitation
4 increases to pay principal and interest on limited tax bonds issued
5 by any governmental unit, including a county, township, community
6 college district, or school district, before January 1, 1964, if
7 the assessment required to be made under this act would be less
8 than the assessment as state equalized prevailing on the property
9 at the time of the issuance of the bonds. This inapplicability
10 continues until levy of taxes to pay principal and interest on the
11 bonds is no longer required. The assessment of property required by
12 this act applies for all other purposes.
13 (6) As used in this act, "transfer of ownership" means the
14 conveyance of title to or a present interest in property, including
15 the beneficial use of the property, the value of which is
16 substantially equal to the value of the fee interest. Transfer of
17 ownership of property includes, but is not limited to, the
18 following:
19 (a) A conveyance by deed.
20 (b) A conveyance by land contract. The taxable value of
21 property conveyed by a land contract executed after December 31,
22 1994 shall must be adjusted under subsection (3) for the calendar
23 year following the year in which the contract is entered into and
24 shall must not be subsequently adjusted under subsection (3) when
25 the deed conveying title to the property is recorded in the office
26 of the register of deeds in the county in which the property is
27 located.
28 (c) A conveyance to a trust after December 31, 1994, except
29 under any of the following conditions:
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1 (i) If the settlor or the settlor's spouse, or both, conveys
2 the property to the trust and the sole present beneficiary or
3 beneficiaries are the settlor or the settlor's spouse, or both.
4 (ii) Beginning December 31, 2014, for residential real
5 property, if the settlor or the settlor's spouse, or both, conveys
6 the residential real property to the trust and the sole present
7 beneficiary or beneficiaries are the settlor's or the settlor's
8 spouse's mother, father, brother, sister, son, daughter, adopted
9 son, adopted daughter, grandson, or granddaughter and the
10 residential real property is not used for any commercial purpose
11 following the conveyance. Upon request by the department of
12 treasury or the assessor, the sole present beneficiary or
13 beneficiaries shall furnish proof within 30 days that the sole
14 present beneficiary or beneficiaries meet the requirements of this
15 subparagraph. If a present beneficiary fails to comply with a
16 request by the department of treasury or assessor under this
17 subparagraph, that present beneficiary is subject to a fine of
18 $200.00.
19 (d) A conveyance by distribution from a trust, except under
20 any of the following conditions:
21 (i) If the distributee is the sole present beneficiary or the
22 spouse of the sole present beneficiary, or both.
23 (ii) Beginning December 31, 2014, a distribution of residential
24 real property if the distributee is the settlor's or the settlor's
25 spouse's mother, father, brother, sister, son, daughter, adopted
26 son, adopted daughter, grandson, or granddaughter and the
27 residential real property is not used for any commercial purpose
28 following the conveyance. Upon request by the department of
29 treasury or the assessor, the sole present beneficiary or
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1 beneficiaries shall furnish proof within 30 days that the sole
2 present beneficiary or beneficiaries meet the requirements of this
3 subparagraph. If a present beneficiary fails to comply with a
4 request by the department of treasury or assessor under this
5 subparagraph, that present beneficiary is subject to a fine of
6 $200.00.
7 (e) A change in the sole present beneficiary or beneficiaries
8 of a trust, except under any of the following conditions:
9 (i) A change that adds or substitutes the spouse of the sole
10 present beneficiary.
11 (ii) Beginning December 31, 2014, for residential real
12 property, a change that adds or substitutes the settlor's or the
13 settlor's spouse's mother, father, brother, sister, son, daughter,
14 adopted 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 (f) A conveyance by distribution under a will or by intestate
25 succession, except under any of the following conditions:
26 (i) If the distributee is the decedent's spouse.
27 (ii) Beginning December 31, 2014, for residential real
28 property, if the distributee is the decedent's or the decedent's
29 spouse's mother, father, brother, sister, son, daughter, adopted
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1 son, adopted daughter, grandson, or granddaughter and the
2 residential real property is not used for any commercial purpose
3 following the conveyance. Upon request by the department of
4 treasury or the assessor, the sole present beneficiary or
5 beneficiaries shall furnish proof within 30 days that the sole
6 present beneficiary or beneficiaries meet the requirements of this
7 subparagraph. If a present beneficiary fails to comply with a
8 request by the department of treasury or assessor under this
9 subparagraph, that present beneficiary is subject to a fine of
10 $200.00.
11 (g) A conveyance by lease if the total duration of the lease,
12 including the initial term and all options for renewal, is more
13 than 35 years or the lease grants the lessee a bargain purchase
14 option. As used in this subdivision, "bargain purchase option"
15 means the right to purchase the property at the termination of the
16 lease for not more than 80% of the property's projected true cash
17 value at the termination of the lease. After December 31, 1994, the
18 taxable value of property conveyed by a lease with a total duration
19 of more than 35 years or with a bargain purchase option shall must
20 be adjusted under subsection (3) for the calendar year following
21 the year in which the lease is entered into. This subdivision does
22 not apply to personal property except buildings described in
23 section 14(6) and personal property described in section 8(h), (i),
24 and (j). This subdivision does not apply to that portion of the
25 property not subject to the leasehold interest conveyed.
26 (h) Except as otherwise provided in this subdivision, a
27 conveyance of an ownership interest in a corporation, partnership,
28 sole proprietorship, limited liability company, limited liability
29 partnership, or other legal entity if the ownership interest
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1 conveyed is more than 50% of the corporation, partnership, sole
2 proprietorship, limited liability company, limited liability
3 partnership, or other legal entity. Unless notification is provided
4 under subsection (10), the corporation, partnership, sole
5 proprietorship, limited liability company, limited liability
6 partnership, or other legal entity shall notify the assessing
7 officer on a form provided by the state tax commission not more
8 than 45 days after a conveyance of an ownership interest that
9 constitutes a transfer of ownership under this subdivision. Both of
10 the following apply to a corporation subject to 1897 PA 230, MCL
11 455.1 to 455.24:
12 (i) A transfer of stock of the corporation is a transfer of
13 ownership only with respect to the real property that is assessed
14 to the transferor lessee stockholder.
15 (ii) A cumulative conveyance of more than 50% of the
16 corporation's stock does not constitute a transfer of ownership of
17 the corporation's real property.
18 (i) A transfer of property held as a tenancy in common, except
19 that portion of the property not subject to the ownership interest
20 conveyed.
21 (j) A conveyance of an ownership interest in a cooperative
22 housing corporation, except that portion of the property not
23 subject to the ownership interest conveyed.
24 (k) Notwithstanding the provisions of section 7ee(5), at the
25 request of a property owner, an assessor's establishment of a
26 separate tax parcel for a portion of a parcel that ceases to be
27 qualified agricultural property but is not subject to a land
28 division under the land division act, 1967 PA 288, MCL 560.101 to
29 560.293, or any local ordinance. For purposes of this subdivision,
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1 a transfer of ownership occurs only as to that portion of the
2 parcel established as a separate tax parcel and only that portion
3 shall must have its taxable value adjusted under subsection (3) and
4 shall be is subject to the recapture tax provided for under the
5 agricultural property recapture act, 2000 PA 261, MCL 211.1001 to
6 211.1007. The adjustment under subsection (3) shall must be made as
7 of the December 31 in the year that the portion of the parcel
8 established as a separate tax parcel ceases to be qualified
9 agricultural property. A portion of a parcel subject to this
10 subdivision is considered a separate tax parcel only for those
11 purposes described in this subdivision.
12 (7) Transfer of ownership does not include the following:
13 (a) The transfer of property from 1 spouse to the other spouse
14 or from a decedent to a surviving spouse.
15 (b) A transfer from a husband, a wife, or a married couple 1
16 or both spouses creating or disjoining a tenancy by the entireties
17 in the grantors or the grantor and his or her the grantor's spouse.
18 (c) Subject to subdivision (d), a transfer of that portion of
19 property subject to a life estate or life lease retained by the
20 transferor, until expiration or termination of the life estate or
21 life lease. That portion of property transferred that is not
22 subject to a life lease shall must be adjusted under subsection
23 (3).
24 (d) Beginning December 31, 2014, a transfer of that portion of
25 residential real property that had been subject to a life estate or
26 life lease retained by the transferor resulting from expiration or
27 termination of that life estate or life lease, if the transferee is
28 the transferor's or transferor's spouse's mother, father, brother,
29 sister, son, daughter, adopted son, adopted daughter, grandson, or
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1 granddaughter and the residential real property is not used for any
2 commercial purpose following the transfer. Upon request by the
3 department of treasury or the assessor, the transferee shall
4 furnish proof within 30 days that the transferee meets the
5 requirements of this subdivision. If a transferee fails to comply
6 with a request by the department of treasury or assessor under this
7 subdivision, that transferee is subject to a fine of $200.00.
8 (e) A transfer through foreclosure or forfeiture of a recorded
9 instrument under chapter 31, 32, or 57 of the revised judicature
10 act of 1961, 1961 PA 236, MCL 600.3101 to 600.3285 and MCL 600.5701
11 to 600.5759, or through deed or conveyance in lieu of a foreclosure
12 or forfeiture, until the mortgagee or land contract vendor
13 subsequently transfers the property. If a mortgagee does not
14 transfer the property within 1 year of the expiration of any
15 applicable redemption period, the property shall must be adjusted
16 under subsection (3).
17 (f) A transfer by redemption by the person to whom taxes are
18 assessed of property previously sold for delinquent taxes.
19 (g) A conveyance to a trust if the settlor or the settlor's
20 spouse, or both, conveys the property to the trust and any of the
21 following conditions are satisfied:
22 (i) If the sole present beneficiary of the trust is the settlor
23 or the settlor's spouse, or both.
24 (ii) Beginning December 31, 2014, for residential real
25 property, if the sole present beneficiary of the trust is the
26 settlor's or the settlor's spouse's mother, father, brother,
27 sister, son, daughter, adopted son, adopted daughter, grandson, or
28 granddaughter and the residential real property is not used for any
29 commercial purpose following the conveyance. Upon request by the
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1 department of treasury or the assessor, the sole present
2 beneficiary or beneficiaries shall furnish proof within 30 days
3 that the sole present beneficiary or beneficiaries meet the
4 requirements of this subparagraph. If a present beneficiary fails
5 to comply with a request by the department of treasury or assessor
6 under this subparagraph, that present beneficiary is subject to a
7 fine of $200.00.
8 (h) A transfer pursuant to a judgment or order of a court of
9 record making or ordering a transfer, unless a specific monetary
10 consideration is specified or ordered by the court for the
11 transfer.
12 (i) A transfer creating or terminating a joint tenancy between
13 2 or more persons if at least 1 of the persons was an original
14 owner of the property before the joint tenancy was initially
15 created and, if the property is held as a joint tenancy at the time
16 of conveyance, at least 1 of the persons was a joint tenant when
17 the joint tenancy was initially created and that person has
18 remained a joint tenant since the joint tenancy was initially
19 created. A joint owner at the time of the last transfer of
20 ownership of the property is an original owner of the property. For
21 purposes of this subdivision, a person is an original owner of
22 property owned by