The Department of Treasury (the Department) denied petitioner’s claim of a principal residence exemption (PRE) under MCL 211.7cc for the 2013, 2014, and 2015 tax years.
The Tax Tribunal determined that petitioner was the owner of the subject residential properties but could not receive the PRE because he did not occupy the properties during the tax years at issue. The Tax Tribunal also determined that petitioner’s wife, a co-owner of the properties, could not claim the PRE because she did not file the required affidavit and, in any event, did not occupy the properties for the tax years at issue.
Though petitioner transferred the properties to a new owner, the Tax Tribunal ruled that petitioner was nonetheless liable for the taxes resulting from the improperly assessed PRE because petitioner conveyed the properties to a bona fide purchaser.
First, petitioner argues that he validly claimed the PRE on behalf of his wife. Second, he argues that as a result of his conveyance of the properties by warranty deed in lieu of foreclosure, the current owner of the properties was not a bona fide purchaser and should be liable for any additional tax, interest, or penalties.
MCL 211.7cc(2) provides that an owner of property can claim the PRE by filing an affidavit that must state that the property is owned and occupied as a principal residence by that owner of the property on the date that the affidavit is signed and shall state that the owner has not claimed a substantially similar exemption, deduction, or credit on property in another state.
Petitioner claimed the PRE by relying on an affidavit that he submitted stating that he owned and occupied the subject properties as his principle residence for tax years 2013-2015. It is undisputed that petitioner did not, in fact, occupy the subject properties as his principle residence in those years. When this came to light, the Department denied the claimed PRE. Petitioner appealed to the Tax Tribunal, contending that his wife occupied the properties as her principle residence, and because he and his wife were co-owners of the properties, they were a single owner, and she did not need to file a separate affidavit for the property to be entitled to a PRE. By the plain language of MCL 211.7cc(2) as defined by MCL 211.7dd(a) and (b), the petitioner cannot claim the exemption on his wife’ behalf.
MCL 211.7cc(8) provides, in relevant part, that if the property has been transferred to a bona fide purchaser before additional taxes were billed to the seller as a result of the denial of a claim for exemption, the taxes, interest, and penalties shall not be a lien on the property and shall not be billed to the bona fide purchaser.
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