New legislation could trim property taxes on second homes

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Capital News Service

LANSING — A new bill would financially benefit owners of second homes on the coast of Lake Michigan and other vacation areas.

The bill, sponsored by Rep. Jeff Yaroch, R-Richmond, would require local governments to cut property taxes in proportion to the amount of time that owners couldn’t use their second homes, cabins and cottages due to travel restrictions in the state’s stay-at-home executive order.

Gov. Gretchen Whitmer has extended the order to May 15, although some businesses will be allowed to reopen.

In addition, some Northern Michigan residents and officials are calling for those who normally travel north for the summer to stay home to reduce the spread of COVID-19. 

Derek Melot, director of communications and marketing for the Michigan Association of Counties, said the organization opposes the legislation.

Jim Clarey, a Wyoming, Michigan, resident who also has owned a home in Ludington since 2003, said that it isn’t a big deal to him and his wife if they get any sort of tax break – but that it definitely could help some.

“I’m of the opinion that property tax is part of the cost of owning a second home,” Clarey said, adding  that whether the legislation passes, it doesn’t matter to him financially since he believes that taxes are a part of the cost of owning a second piece of property. 

“It depends on each individual’s life situation. If you can afford a second home Up North, then some people might say you ought to be able to afford the taxes,” Clarey said.

The bill expresses an intent to  have the state reimburse localities for lost property tax revenue but doesn’t include a commitment to do so.  

Clarey said he’s concerned that other things may become underfunded because of that. 

Yaroch’s bill has been referred to the House Committee on Local Government and Municipal Finance.

Per capita, the average property tax payment in the state is $1,382.10, while the national average is closer to $1,500, according to a 24/7 Wall Street report. 

Waterfront property is a huge part of Michigan’s real estate business, and the tourism economy of the state’s West side as an asset to the state financially. 

Mason County Treasurer Andrew Kmetz IV said that property taxes are a big part of local revenue. 

While he doesn’t have clear numbers on the potential financial impact, Kmetz said he “would prefer to see this as an income tax credit, as the wording in the bill does not guarantee reimbursement to taxing entities as written, creating the potential for an unfunded mandate.”

The county seat is a popular tourist destination: Ludington. 

Property taxes provide revenue for local government and school districts. So cuts on payments could force local governments and school districts among higher tourism areas to dip into funds used for other departments without state reimbursement.

“With this potential legislation, I am concerned about the entities that need these tax revenues to operate,” Kmetz said. “These are our 911 operations, police, fire, jails, medical care facilities, senior citizens programs, libraries, schools and local governments. 

“Most of these entities do not have a choice on whether to operate during this time, and do so at greater risk,” he said.

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