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Homestead Property Tax Relief for Disabled Veterans

by Jul 13, 2017

On November 13, 2013, that State of Michigan enacted certain statutory provisions that eliminated real property taxes on property used as a homestead for disabled American veterans, who had received an honorable discharge.  In order to obtain such exemption, an appropriate Affidavit with supporting documentation, along with the description of the real property involved, must be filed with the local assessor.  The attorneys at Damon, Ver Merris, Boyko & Witte, PLC are ready to assist you in applying for this exemption.

Upon death of the disabled veteran, his/her exemption carries forward for his or her surviving spouse, as long as they remain unmarried and occupy the property as their homestead.   The surviving spouse shall likewise annually indicate on an Affidavit that she or he is the surviving spouse of the deceased disabled veteran and remains unmarried.

A disabled veteran means a person of the State of Michigan who has been determined by the U.S. Department of Veteran Affairs  (the “V.A.”) to be (a) permanently and totally disabled; (b) has a certificate from the V.A. that he or she is receiving financial assistance due to disability for specially adapted housing; or (c)  has been rated by the V.A. as unemployable.  If you can meet one or more of these tests, then you should qualify for the exemption.  There is no asset based test or means test and nothing precludes the veteran from being gainfully employed (unless he/she is seeking qualification under the last – “unemployable” – test).

The exemption is granted by the Board of Review, not the local assessor, which Board generally meets in March, July, and December of each year.  If the exemption is granted, it is generally good for a year.  If a property was purchased mid-year or an application was made part-way through the year, and was later granted, a tax refund would be issued.  If the taxes are paid by the disabled veteran as part of a mortgage payment, and an exemption is later granted, they should contact their mortgage company about how to obtain a refund of taxes previously paid that year.

Keep in mind that special assessments are not considered property taxes, so the exemption would not apply to them and these assessments would still have to be paid.  (Note that there is an exception for special assessments for police and fire protection, so this type of special assessment would be covered by the exemption from taxation).

In order to apply for the exemption, you must annually file an Affidavit with the local taxing unit.  This Affidavit is Form 5107 and it is titled:  Affidavit for Disabled Veterans Exemption. Ideally, this form should be completed and filed (with supporting evidence of disablement) with the local assessor in January or February each year, although it can be submitted as late as the last day the Board of Review meets in a particular year.

The exemption only applies to a homestead, owned by the disabled veteran, or his unmarried surviving spouse.  A homestead is defined as any dwelling with its land and buildings where a family makes its home.  It must be the primary residence of a Michigan resident (or of the unmarried surviving spouse who is a Michigan resident).  The claimant must have also filed a Michigan income tax return claiming resident status.   The exemption does not apply to contiguous property nor does it apply if the property is used for any commercial or business purpose (other than farming).

While the property involved must be owned by the disable veteran (or his unmarried surviving spouse) it can, in certain situations, be held in a trust.  It can also be held in the veterans name subject to an enhanced life estate under what is commonly known as a “Lady Bird” deed, and still qualify for the exemption.  However, property held in joint tenancy, tenants in common, or some other type of joint ownership, will usually not qualify for the exemption.

If property subject to an exemption is sold during the course of a year, the property taxes will be proportionately removed.  Depending upon how the purchase agreement is structured, the buyer (if not otherwise qualified) would likely be responsible for the pro-rated portion of the taxes due for that year, once the exemption was eliminated, most likely from the sale date forward.  In the same fashion, if the disabled veteran purchases property mid-year and pays real property taxes, these would be refunded to him, once the Affidavit and a Closing Statement (showing the date of closing) was filed and approved.  (If possession was given to the disabled veteran within 30 days of the date of closing then the closing date will be used; otherwise, it will be the possession date).

Many other issues may arise as to the granting or the retention of such exemption.  Should you need assistance with tax issues, have a real estate problem for which you need legal assistance, or some other legal matter, please contact the professionals at Damon, Ver Merris, Boyko & Witte, PLC.  We are here to help.  – Larry A. Ver Merris / July 13, 2017

While this posting originates from a law office, none of the contents should, in any way, be considered legal advice. If you have not signed a retention letter describing the legal services to be provided and the amount to be paid for such services, you are not a client of this firm.

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