Michigan Principal Residence Exemption: What Buyers Must Verify Before Closing

Brighton, South Lyon, Howell, and Livingston County - how the 18-mill homestead spread works and why the current tax bill can be wrong

The Michigan Principal Residence Exemption, or PRE, exempts an owner-occupied home from the local school operating millage, up to 18 mills. In Livingston County that is worth roughly $4,680 per year on a home with a $260,000 taxable value, or about $390 a month. The exemption is not automatic and it does not transfer with the property. A home can show as exempt on the current tax bill and still be billed at the non-exempt rate the following year. That is why the number printed on the tax bill you are handed during a showing is a starting point for verification, not an answer.

What the exemption actually does

Michigan property tax bills are built from a stack of millages levied by the county, the township or city, and other authorities. One component of that stack is the local school operating millage, levied at up to 18 mills. The Principal Residence Exemption removes that component for a property the owner owns and occupies as a principal residence.

Everything else on the bill stays. The exemption does not reduce county millage, township millage, the State Education Tax, library millage, or any special assessment. It removes one layer, and that layer is worth up to 18 mills.

The statutory basis is MCL 211.7cc and MCL 211.7dd. Michigan defines a principal residence as the one place where an owner has a true, fixed, and permanent home and to which the owner intends to return when away. It is a separate program from the Michigan Homestead Property Tax Credit, which is claimed annually on a Michigan income tax return and has nothing to do with the property tax roll.

The 18-mill spread in dollars

A mill is one dollar of tax per $1,000 of taxable value. At the full 18 mills, the exemption is worth $18 per year for every $1,000 of taxable value. That is the mechanic. The arithmetic from there is straightforward.

Applied to a $260,000 taxable value:

• 18 mills x 260 = $4,680 per year
• Roughly $390 per month added to an escrowed payment
• Over a five-year hold, about $23,400

Taxable value is not sale price. Following a transfer of ownership the taxable value uncaps to 50% of the assessor's determination of true cash value, so a $260,000 taxable value corresponds to roughly a $520,000 valuation. Run your own figure before relying on any example. If you are unsure how uncapping will change the number, start with Michigan property tax uncapping, which covers that mechanic in full.

Here is how the spread appears in several Livingston County jurisdictions on the 2025 rates published by the Michigan Department of Treasury. The rates are shown as total mills with the exemption and total mills without it. The jurisdiction names identify which local school operating millage applies to the parcel and are used here for that purpose only.

Note the last row. The spread is 18.0000 mills in most of Livingston County but not everywhere. A few local school operating levies sit slightly below the 18-mill ceiling, which is why the statute and this page both say "up to 18 mills" rather than a flat 18. Hartland Consolidated runs 17.9136. Byron Area and Huron Valley are also slightly under.

Why the current tax bill can be wrong

This is the part that costs buyers real money, and it is not obvious from any document handed over during a showing.

Exemption status is tied to the tax roll for a given year. It can change during a year without the change appearing on a bill that has already been issued. A sequence Derek has seen play out looks like this:

• The home is owner-occupied and exempt in 2024
• The owner moves during 2025 and the exemption is rescinded partway through the year
• The 2025 bill still shows the property as exempt, because the roll for that year was already set
• For 2026 the property is billed without the exemption, at a rate up to 18 mills higher

A buyer reviewing that 2025 bill sees a number that is accurate for 2025 and materially wrong for the year they will actually own the home. On a $260,000 taxable value the gap is $4,680. Nothing in the listing corrects it, because the listing is reporting the last issued bill.

The second half of the problem is the buyer's own status. Whether a home was exempt for the seller has no bearing on whether it will be exempt for you. If the property will be an owner-occupied principal residence, the exemption has to be claimed. If it will not be, it should not be claimed, and the tax figure used in underwriting needs to reflect the higher rate from the outset rather than surfacing as a surprise after closing.

Filing deadlines decide which bill you pay

The exemption is claimed by filing a Principal Residence Exemption Affidavit, Michigan Department of Treasury Form 2368, with the assessor for the city or township where the property sits. Not the county, not the closing agent, not the lender. The local assessing jurisdiction.

There are two deadlines each year and they produce different outcomes:

• On or before June 1 - the exemption applies to that year's summer levy and winter levy, and to later years while the property remains the owner's principal residence
• After June 1 and on or before November 1 - the exemption applies to that year's winter levy only, and to later years

The practical effect for a summer closing is direct. File in time and the summer bill lands with the exemption applied. Miss June 1 and the summer bill is issued without it, even though the winter bill will carry it. A closing that happens in early June with no one attending to the affidavit produces exactly that outcome.

Missing both deadlines does not end the matter permanently, but the correction runs through the local Board of Review, and Michigan restricts exemption matters to the July and December Boards of Review. That is a slower and less certain path than filing on time.

Run the Michigan Property Tax Estimator →

A prior exemption has to be rescinded first

An owner may hold the exemption on one principal residence. When someone no longer owns or occupies a property as a principal residence, they file a Request to Rescind Principal Residence Exemption, Form 2602, with the assessor for that property. Michigan requires this within 90 days.

The sequencing matters. If a prior exemption is left in place, the new claim can be complicated or denied, and Treasury has authority to issue denials reaching back into prior years, with additional tax, penalty, and interest attached. Sorting that out after the fact is considerably more work than filing in the right order at the right time.

This is a step Derek handles rather than delegating. On a purchase he confirms the prior exemption is rescinded and files the new affidavit, so the two actions happen in sequence and neither is assumed to have been taken care of by someone else at the closing table.

Conditional rescission, for an owner who has moved but not yet sold

Michigan provides a conditional rescission, Form 4640, for an owner who has established a new principal residence while still owning the previous one. It allows the exemption to be held on both properties at once, for up to three years, provided the former home is unoccupied, listed for sale, not leased, and not used for any business or commercial purpose. It must be renewed annually.

It is a genuine option and worth knowing about. In practice, Derek does not see it used often in the current Livingston County market. Conditional rescission solves a problem that arises when a property sits unsold for an extended stretch, and inventory conditions across Brighton, South Lyon, Howell, and Hartland have not produced that pattern at scale. If your situation is the exception, the form exists and the assessor can walk through eligibility.

How Derek handles this on a transaction

Derek Bauer is an Associate Broker and REALTOR® with Real Estate One in Brighton, with 24+ years of full-time experience and 1,100+ closed transactions across Livingston, Oakland, Washtenaw, and Wayne counties. Exemption status is checked as a matter of routine, not on request:

• Current exemption status confirmed directly with the assessing jurisdiction before an offer is written, rather than taken from the MLS or from the listing side
• The applicable millage identified for the specific parcel, so the tax figure used in an offer and in underwriting reflects the rate the buyer will actually pay
• Prior exemption rescission confirmed, and the new affidavit filed, in that order
• Filing timed against the June 1 and November 1 deadlines relative to the closing date

None of this is exotic. It is attention to a step that gets assumed away often enough to be worth naming. If you are weighing a purchase and want the tax picture settled before you are committed to it, a Buyer Discovery Session is the place to start. On the sell side, SellerProceeds.com will model your net proceeds, including the tax proration line.

Official forms and the State's own guidance are published by the Michigan Department of Treasury at michigan.gov/taxes/property/principal.

Frequently Asked Questions

What is the Michigan Principal Residence Exemption worth?

The exemption removes up to 18 mills of local school operating tax from an owner-occupied principal residence. That is $18 per year for every $1,000 of taxable value. On a Livingston County home with a $260,000 taxable value the exemption is worth about $4,680 per year, or roughly $390 per month on an escrowed payment. The exact figure depends on the local school operating millage for the specific parcel, which in a few Livingston County jurisdictions sits slightly below the 18-mill ceiling.

Does the Principal Residence Exemption transfer to me when I buy the house?

No. The exemption belongs to the owner who claimed it, not to the property, and it does not carry over at closing. To claim it you file Form 2368 with the assessor for the city or township where the property is located. A home that was exempt for the seller will be billed without the exemption for you unless you file.

What are the Michigan PRE filing deadlines?

There are two. An affidavit filed on or before June 1 applies to that year's summer and winter levies and to subsequent years. An affidavit filed after June 1 and on or before November 1 applies to that year's winter levy only, and to subsequent years. For a late spring or early summer closing in Brighton, South Lyon, or Howell, missing June 1 means the summer bill arrives without the exemption applied.

Can I trust the tax amount shown on the listing?

Treat it as a starting point and verify it. A listing reports the most recently issued bill, and exemption status can change mid-year without appearing on a bill that has already gone out. A home shown as exempt for the current year can be billed at the higher non-exempt rate the following year. Derek Bauer verifies exemption status and the applicable millage directly with the assessing jurisdiction before an offer is written.

What happens if the seller did not rescind their exemption?

A prior exemption left in place can complicate or delay a new claim on the same parcel, and Michigan Treasury has authority to issue denials covering the current year and prior years, with additional tax, penalty, and interest. Form 2602 is the rescission, due within 90 days of the owner no longer owning or occupying the property. Derek confirms the rescission and files the new affidavit in sequence rather than assuming it was handled at closing.

Can I keep the exemption on my old home while I sell it?

Possibly. Michigan's conditional rescission, Form 4640, lets an owner hold the exemption on a former principal residence for up to three years while it is unoccupied, listed for sale, not leased, and not used commercially, and it must be renewed each year. It is available across Livingston County, though current inventory conditions mean few Brighton and Howell area sellers end up needing it.

Is the Principal Residence Exemption the same as the Homestead Property Tax Credit?

No, and they are frequently confused because both are called a homestead. The Principal Residence Exemption is a property tax exemption filed with your local assessor that removes up to 18 mills of local school operating tax. The Homestead Property Tax Credit is an income tax credit claimed annually on a Michigan income tax return. Filing one does not affect the other.

Related Resources

• Michigan Property Tax Estimator
• Michigan Property Tax Uncapping
• Home Buyer Guide
• Working With Derek to Buy a Home
• Livingston County Market Report
• Net Proceeds Calculator

Connect With Derek

Whether you are working through the tax picture on a home you are considering or sorting out an exemption question on a property you already own, Derek welcomes a direct, confidential conversation.

Derek Bauer

Associate Broker, REALTOR® | Real Estate One

Certified Residential Specialist (CRS) - Residential Real Estate Council

565 E. Grand River Ave., Brighton, MI 48116

734-678-4745

[email protected]

Broker compensation is not set by law and is fully negotiable. All compensation is determined through negotiation between the parties. The information on this page is provided for general informational purposes only and does not constitute professional real estate, legal, financial, or tax advice. Millage rates shown are 2025 rates as published by the Michigan Department of Treasury, Property Services Division, and do not include the 1% property tax administration fee. Rates change and exemption eligibility depends on individual circumstances. Verify current rates and exemption status with the assessor for the city or township where the property is located. Past performance is not a guarantee of future results. Individual transaction outcomes vary. Derek Bauer is a licensed Michigan Associate Broker (License #6506038159) operating under Real Estate One, 565 E. Grand River Ave., Brighton, MI 48116. Equal Housing Opportunity.