Low-income seniors in Michigan are supposed to get a homestead property tax credit, worth up to $1,500. But due to rising home prices many cannot get ANY credit at all!
Seniors are eligible for the tax credit on the amount of property tax they pay that is more than 3.2% of their income.
How the credit is calculated?
Let’s use an example. A widow’s income is Social Security of $2,000 per month or $24,000 per year. 3.2% of her income is $768. Let’s say she lives in Farmington Hills in Oakland County. According to Realtor.com the median price of homes in Farmington Hills is $318,000. So if she has an average home worth $320,000., the taxable value of her home would be $160,000. According to the smartasset.com website, her property taxes would be $2,480. So it would seem that she should get the full $1,500 credit since $2,460 is $1,692 over her 3.2% of income ($768). BUT, she will get ZERO dollars.
Why? Because the taxable value of her home exceeds the $136,000 taxable value maximum. That’s right, if her home were worth $272,000 or less she would get the full $1,500 tax credit. It doesn’t make sense. Seniors with just average suburban homes get nothing in the tax credit.
I understand that Michigan state senator Runestad and The Michigan Elder Law Section is looking into this issue and we should expect a report in the spring. Contact your Michigan state senator and representative if you or your senior relatives don’t get their Michigan property tax credit.
I’ll post more information when it comes in.