Question 1

What is the Principal Residence Exemption in Michigan?

Accepted Answer

The Principal Residence Exemption (PRE), also called the homestead exemption, removes 18 mills of local school operating tax from your annual property tax bill on the home you occupy as your primary residence. On a Grand Rapids home with $150,000 of taxable value, that saves roughly $2,700 per year. Only one PRE per Michigan resident is allowed at a time, and only on the property where you actually live more than half the year. Vacation homes, investment properties, and second residences do not qualify. The exemption is governed by MCL 211.7cc.

Question 2

Do I lose my PRE when I sell my Grand Rapids home?

Accepted Answer

Yes. Once the property is no longer your principal residence, you must file Form 2602 (Request to Rescind PRE) with the local assessor within 90 days. The PRE benefit ends on the date you no longer occupy the home as your primary residence, typically the closing date. If you move to a new Michigan principal residence, you file Form 2368 on the new home to claim PRE there. You can never have two active PREs simultaneously. Holden Richardson of 616 Realty includes the rescission form in every Grand Rapids seller's closing packet.

Question 3

What is Form 2602 and when do I file it?

Accepted Answer

Form 2602 is the Michigan Department of Treasury 'Request to Rescind Principal Residence Exemption' form. You file it with the assessor of the city, township, or village where the sold property is located within 90 days of the property no longer being your principal residence — typically the closing date. The form requires the property address, parcel identification number, date of rescission, and your signature. Most Grand Rapids title companies include Form 2602 in the seller's closing packet, but the legal responsibility for filing falls on the seller, not the title company.

Question 4

How much will my Grand Rapids buyer's taxes go up after the sale?

Accepted Answer

Two factors raise the buyer's tax bill: PRE status and taxable value uncapping. If the buyer claims PRE timely, they keep the 18-mill exemption you had. If they cannot or do not, they pay non-homestead — roughly $1,500–$2,800 more per year on a $300K home. Separately, in the year after the sale, the taxable value 'uncaps' from the Proposal A capped value to the full State Equalized Value (SEV). On homes owned for 10+ years, this can raise taxable value 20–40%, adding another $1,000–$2,500 to the bill regardless of PRE.

Question 5

What does 'uncapping' mean and why does it matter to my buyer?

Accepted Answer

Michigan's Proposal A (1994) caps annual taxable value increases at the lesser of inflation or 5% as long as the same owner holds the property. When the property transfers, the cap resets and taxable value 'uncaps' to the State Equalized Value (SEV) — half of the assessor's true cash value — for the year following the sale. On a Grand Rapids home owned since 2010, taxable value might be $90,000 while SEV is $145,000. The buyer's first full-year bill is calculated on the higher uncapped value. Sellers should disclose this so buyers underwrite the right number.

Question 6

Can I keep my PRE if I move out before the home sells?

Accepted Answer

Generally no. The PRE requires the property to be your principal residence — where you actually live more than half the year. If you move out and the home sits vacant or rented while waiting to sell, you are technically required to rescind PRE within 90 days of no longer occupying it. There is a temporary 'conditional rescission' option (Form 4640) that lets you keep PRE for up to three years on a former principal residence while it is for sale and not rented or otherwise occupied — useful for sellers who relocate before listing in Grand Rapids.

Question 7

How does PRE affect the proration math on my closing statement?

Accepted Answer

PRE status determines which millage rate is used to calculate the daily tax cost for proration. A PRE-claimed Grand Rapids home at $300K typically has annual taxes around $2,850; a non-PRE home of the same value runs $4,500+. The closing statement uses the actual current bill — which reflects your PRE — to calculate how many days each party owes. Because Michigan summer taxes are billed July 1 in advance, the seller usually credits the buyer for the portion of summer taxes covering days after closing. The full worked math is in my long-form PRE guide.

Question 8

What if I had two PREs by mistake?

Accepted Answer

If you claimed PRE on both your old and new homes simultaneously — common when buying before selling — the assessor can deny the second PRE, claw back the improper exemption for up to four years, and assess interest at 1.25% per month. The cleanest path is to rescind the old PRE on Form 2602 the day you close on the new home, then file Form 2368 on the new home immediately. Holden Richardson coordinates timing for sellers in this position so the rescission and new claim happen on the right calendar days.

Question 9

Do I need to do anything if my buyer is not claiming PRE?

Accepted Answer

From the seller's side, no — your obligation is to rescind your own PRE within 90 days using Form 2602. The buyer's PRE decision affects their tax bill, not yours. However, buyers shopping your home will ask whether PRE is currently in place, because if you have PRE and they qualify, they get the same low millage. If your home is non-PRE (rental, second home), buyers underwrite the higher non-homestead rate into their offer, which typically reduces what they will pay.

Question 10

How do I file PRE rescission when selling a Grand Rapids home?

Accepted Answer

Three steps. First, complete Form 2602 with the property address, parcel ID, and the date the home stopped being your principal residence (usually closing date). Second, submit it to the assessor of the city or township where the property is located — for the City of Grand Rapids, that is the City Assessor's office; for surrounding townships, the township assessor. Third, keep a date-stamped copy. Holden Richardson, Realtor®, 616 Realty LLC, MI License #6501392389, includes Form 2602 in every seller's closing packet and confirms filing within the 90-day window.

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