DETROIT – Detroit State Representatives Bert Johnson, Shanelle Jackson, Bettie Cook Scott and LaMar Lemmons Jr. today unveiled the House Democrats' Homeowner Protection and Stimulus Plan, a package of bills that will help jumpstart Michigan's home sales market by suspending the so-called "pop-up tax" and protect residents from losing their homes when they lose their jobs to outsourcing or downsizing.
"Simply put, these bills will make it easier for Detroiters to keep their homes or buy new ones," said Johnson. "Michigan residents have been asked to deal with a number of issues, and it's easier for them to cope with these issues if they know that their homes are protected."
Representative Shanelle Jackson commented on the investment opportunities that the Protection and Stimulus plan will provide outside of the real estate market.
"People who purchase homes also need to furnish them," said Jackson. "When Detroiters are out buying dining room sets, bedroom sets and televisions for their new homes, they're investing more money in the community."
The House Democrats' plan will eliminate the so-called pop-up tax for Michigan residents who buy a house during the next 18 months. Residents who purchase a home during this window will not have to pay the pop-up tax for as long as they own the home. Under the plan, a home buyer could save up to $1,513 on the purchase of a $100,000 home or up to $3,405 on a $225,000 home, based on statewide average tax rates.
Currently, the assessed taxable value of a home may increase annually by either 5 percent or the rate of inflation, whichever is lower. When a home is sold or transferred, its assessment is uncapped and the home is taxed based on its State Equalized Value. This drastic re-assessment creates a pop-up tax that puts a strain on home buyers; in some cases, the pop-up tax doubles the amount of taxes a new homeowner must pay. The pop-up tax especially affects seniors who have lived in their homes for decades and young families who are trying to get started in life.
House Democrats also are developing a plan that will protect homeowners who have lost their jobs to outsourcing or downsizing from also losing their homes. Under the plan, eligible residents would receive assistance to make their mortgage and tax payments for six months. The assistance would be funded by a second mortgage on the residence. The state would form a public-private partnership with lenders to facilitate the program.
Representative Lemmons agreed.
"Almost everyone in Detroit knows someone whose home is in foreclosure," Lemmons said. "Michigan's economic troubles can be reversed, but the loss of a home can do irreparable damage to a family. By protecting Detroit's homes, we're protecting Detroit's families, too."