CLIENTS–NEW PROPOSED LEGISLATION ON UNCAPPING-ACTION NEEDED!

Cottage Law Clients and Friends:

Many of you have contacted me in the past and expressed interest in any new or potentially new legislation in Michigan regarding “uncapping” of property values for property tax purposes.  As many of you know, the law in Michigan has been amended twice recently, and now provides that owners of Michigan property may transfer their ownership to certain close family relatives without the “uncapping” of property values that would trigger a typically significant increase in property taxes.  The eligible family relatives include the spouse, siblings, children, including adopted children, and grandchildren of either the owner or the spouse of the owner.  The transfers may occur either during the lifetime of the owner, or by inheritance through a Last Will and Testament or a distribution from a Trust.

Up until now, this exemption from uncapping has not been extended to transfers of ownership of limited liability companies (LLCs), corporations or partnerships that own Michigan property.  However, I am delighted to report to you that 2 new Bills have been introduced in the House of Representatives and the Senate addressing this situation.  House Bill 5141 and Senate Bill 648 were introduced today, and links to these Bills are attached below.  These Bills will include transfers of property into LLCs and transfers of LLC ownership as exempt from uncapping in the same manner as transfers of real estate are now exempt.  Also available on my website (and attached here) is a draft letter expressing your support for passage of these bills. I encourage you to print, sign and mail, or email or phone, your individual Representative and Senator.  In addition, letters of support can be sent to members of the Senate Finance Committee and the House Tax Policy Committee.  The members of these committees are listed on the websites for the House and the Senate.  For list of Michigan Representatives and Senators, you can visit these links:

http://www.house.mi.gov/mhrpublic/frmRepList.aspx            http://www.senate.michigan.gov/senatorinfo.html

These new provisions have not yet been signed into law.  They have only been introduced in both Houses of the Michigan Legislature, and both bodies still need to act on them.  However, when they become law, they will provide significant relief for any family that owns vacation property and wishes to keep it in the family for younger generations of family members to enjoy.

I encourage you to contact your political leaders and voice strong support for these measures at your earliest opportunity.

Regards,

Dave Fry

Draft Letter to Support Legislation 12-09-15

SB 648 Introduced 12-9-2015

HB 5141 Introduced 12-9-2015

Comments

  1. Tricia Korhorn says:

    Great news! I’ve already contacted my local Representatives and Senators – both in my place of residence in Michigan and where we have vacation property in Michigan.

  2. Kathleen Devereaux says:

    As Rep Pettalia continues to do additional housekeeping on his transfer of ownership legislation, wouldn’t this be a fine time to suggest retroactivity language…for these and the previous provisions expanding the exemptions. Plenty of transfers to LLCs that occurred before Dec 31 2014.
    The rollback would be retroactive but to avoid the argument that this would place too heavy a burden on the system, there would be no refunds…just present tax relief going forward would save many cottages.
    Just a suggestion that I plan on adding to my letter of support…

    • While retroactivity would be nice, it is my sense that it is not very likely to happen. I encourage you to request it, but realistically, I don’t want to jeopardize passage of the bill prospectively by adding a retroactivity provision. I have been told that any retroactive application is simply not likely to be favorably viewed by the Legislature.

  3. Senate Bill 648 has been referred to the Senate Finance Committee. The Senators on this Committee include Jack Brandenburg, Chair, David Robertson, Marty Knollenberg, Tom Casperson, John Proos, Steven Bieda and Rebekah Warren. Please contact these Senators in support of Senate Bill 648 and House Bill 5141,

  4. E Iglesais says:

    Where does Senate Bill 648 and House Bill 5141 stand at this point in time? Thank you.

    • There has been no action in either house on Senate Bill 648 and House Bill 5141. We remain hopeful that both chambers will take up these bills when the current summer recess is over, and I will post updates on the Cottage Law website and developments occur.

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