Pettalia bill to eliminate ‘pop-up’ tax on family property transfers signed into law

Categories: News

One of the last official acts of Gov. Rick Snyder in 2012 was to sign legislation sponsored by Rep. Peter Pettalia, of the 106th District.

Public Act 497 of 2012, formerly House Bill 4753, creates an exemption for property transfers between immediate family. The so-called “pop-up” tax occurred when property ownership changed and the taxable value was uncapped. Under the new legislation, property taxes will not increase when real estate ownership is transferred between family members including those through marriage and adoption.

“I am happy to see this bill become law because it is very important to the people of my district,” said Pettalia, R-Presque Isle.  “We have hunting land, homesteads and property that have been in the family for more than one hundred years.  I am proud to help families keep their heritage.  This was one of my promised goals when I first ran for this Legislature.

“Now families can better afford to keep properties and continue adding to the cherished memories that they have enjoyed for generations.”

The new law requires that transferred property remains in the residential/secondary home classification and will go into effect Dec. 31, 2013.

Under the previous law, Michigan property tax calculations were adjusted from capped taxable values to current values upon the transfer of the property.

Often the new value was higher, which caused a higher tax bill for the new owners. The increase in taxes was sometimes prohibitive for family members to maintain. The hardship would frequently force them to sell the property usually at a reduced market rate.

PA 497 is the sixth piece of legislation that Pettalia sponsored during his freshman term in the 2011-12 legislative sessions signed into law by Snyder.