WeVote
Log In

Bill

Bill

HB 5996

Property tax: exemptions; partial exemption for qualified principal residence upon transfer of ownership; provide for. Amends 1893 PA 206 (MCL 211.1 - 211.155) by adding sec. 7yy. TIE BAR WITH: HB 6005'26

2025-2026 Regular Session Introduced by Tyrone Carter and 2 co-sponsors

Creates a temporary partial property tax exemption for principal residences after ownership transfers with large post-transfer value increases, phased over two years.

bill electronically reproduced 05/20/2026
#propertytax:assessments #propertytax:exemptions #propertytax:paymentandcollection
0
WeVote Research Nonpartisan
Bill Summary · HB 5996

Overview

  • Bill: HB 5996 (2025-2026)
  • Jurisdiction: Michigan
  • Purpose: Create a partial property tax exemption for a principal residence that transfers ownership, where the transfer leads to a taxable value adjustment and results in a disproportionate rise in value. The exemption is contingent on another related bill (HB 6005) being enacted.
  • Introduction: May 20, 2026; sponsors Weiss (primary), with co-sponsors Tyrone Carter and Laurie Pohutsky; referred to Committee on Government Operations.

Main Purpose and Intent

  • The bill adds a new section (Sec. 7yy) to the General Property Tax Act to provide a targeted, temporary partial exemption on property taxes for a qualified principal residence after an ownership transfer.
  • The exemption is designed to offset increases in property tax liability caused by a significant post-transfer rise in assessed value (surplus value) that results from the transfer.

Key Provisions

  1. Partial Exemption Designation

    • Establishes that qualified principal residence property is exempt from taxes to the extent specified in subsection (2).
    • The exemption is a partial exemption equal to 1 of the following options (i.e., a fixed percentage of the qualified surplus taxable value).

  2. Two-Tier Reduction (by Year)

    • Year 1 after transfer: Taxable value reduction equal to 67% of the qualified surplus taxable value.
    • Year 2 after transfer: Taxable value reduction equal to 33% of the qualified surplus taxable value.

  3. Definition: Qualified Principal Residence Property

    • Must be a principal residence exempt from local school district operating taxes (under section 7cc).
    • Must have experienced a transfer of ownership in the immediately preceding calendar year or the year before that, which led to an adjustment to taxable value under section 27a(3).
    • Must meet one of the following tests:
      • In Year 1 (first calendar year after transfer), the post-transfer taxable value adjustment must be more than 20% greater than the taxable value the property would have had absent the transfer and adjustment.
      • In Year 2 (second calendar year after transfer), the same 20% threshold applies relative to the hypothetical value absent the transfer and adjustment.
    • “Qualified surplus taxable value” is defined as the dollar amount of the difference between the actual adjusted taxable value and the hypothetical value without the transfer/adjustment.

  4. Effective Date and Conditions

    • The act takes effect 180 days after enactment.
    • The effective date is contingent on HB 6005 (a tie-bar in HB 5996) also becoming law; HB 5996 does not take effect unless HB 6005 is enacted.

  5. Enacting Provisions

    • Enacting section 1: sets the timing of the act’s effective date.
    • Enacting section 2: ties the effectiveness to HB 6005’s enactment (this is a legislative tie-bar).

Who or What Would Be Affected

  • Eligible property: Qualifying principal residence that has recently undergone an ownership transfer resulting in a taxable value adjustment and a substantial rise in value (more than 20% relative to a baseline value without the transfer).
  • Taxpayers: Homeowners who meet the criteria could receive a substantial reduction in property taxes for the first two calendar years after the transfer.
  • Local governments: Local school districts and county tax authorities would see temporary reductions in tax revenue for affected properties.

Procedural and Timeline Aspects

  • Triggered by ownership transfer with a subsequent large taxable value adjustment.
  • Two-year window for the exemption (67% in Year 1; 33% in Year 2) based on the “qualified surplus taxable value.”
  • Requires coordination with HB 6005 to become law and to activate the exemption framework.
  • Effective date: 180 days after enactment, contingent on the tie-bar bill’s enactment.

Practical Impact

  • Aims to mitigate abrupt tax increases associated with ownership transfers that produce large taxable value adjustments.
  • Creates a predictable, phased relief to help homeowners manage sudden tax burdens in the immediate years following a transfer.
  • The policy design relies on precise valuation adjustments and hypothetical value baselines, which will necessitate clear administrative guidance and potentially house-specific calculations by the tax jurisdictions.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.