Overview
This section explores the adjoining or contiguous principal residence under MCL 211.7cc and MCL 211.7dd. It examines statutory definitions, case law interpretations, and practical implications for property owners, assessors, and legal practitioners.
Under MCL 211.7dd(c), a principal residence includes an owner’s unoccupied property that is classified as residential or timber-cutover and that adjoins or is contiguous to the owner’s occupied dwelling subject to ad valorem taxes.
For a parcel to qualify for a principal residence exemption under this provision, it must meet several conditions. The parcel must be owned by the individual as defined in MCL 211.7dd(a), remain unoccupied, and adjoin or be contiguous to the owner’s principal residence. It must also be classified as residential or timber-cutover and be claimed by filing a Principal Residence Exemption Affidavit (Form 2368) with the assessor for the city or township where the property is located. Please refer to the Claim Requirement section of these Guidelines for further information regarding the claim requirement.
A property is considered unoccupied when it has no human occupants, such as tenants or residents. It does not need to be completely empty or vacant. Occupancy is determined by the facts of each case, and the taxpayer bears the burden of proof, as established in Eldenbrady v City of Albion, 294 Mich App 251 (2012). The terms “adjoining” and “contiguous” refer to parcels that share a common boundary or touch at a point or along a boundary. Contiguity is not broken by boundary lines between local tax collecting units, nor is it broken by a road or a right-of-way.
To qualify for the exemption on adjoining or contiguous property under MCL 211.7dd(c), the property must be classified as residential or timber-cutover. Parcels classified as agricultural, commercial, industrial, or developmental do not qualify. Classification is based on current use rather than highest and best use or valuation. Property classifications are determined by the local assessor by the first Monday in March each year. Owners who disagree with a classification may petition the March Board of Review. The Michigan Department of Treasury does not have authority to change an assessor’s classification.
Failure to meet any of these requirements disqualifies the parcel from receiving the principal residence exemption.
Adjoining Or Contiguous Principal Residence Scenarios: Frequently Asked Questions
- Chris owns Blue Acre as his principal residence. He also owns Red Acre, a vacant commercially classed parcel that adjoins Blue Acre. Is Red Acre eligible for the principal residence exemption?
No. An adjoining or contiguous property must be classified as residential, or timber-cutover to qualify for a principal residence exemption. The commercial classification makes it ineligible.
- Chris owns and occupies Blue Acre as his principal residence. Blue Acre is classified as commercial. He owns Red Acre, a vacant residential classed parcel that adjoins Blue Acre. Is Red Acre eligible for the principal residence exemption?
Yes. Red Acre qualifies for the principal residence exemption because it is unoccupied, residential, and adjoining. Blue Acre’s commercial classification does not affect eligibility for the principal residence exemption for Red Acre. Property classification is only relevant when determining eligibility for the adjoining or contiguous parcel.
- Chris owns Blue Acre (classed residential) and Red Acre (classed commercial). These parcels adjoin each other and contain the dwelling Chris resides in as his principal residence. Is Red Acre eligible for the principal residence exemption?
Yes. Since Chris’ home sits on both parcels and he occupies them as his principal residence, both qualify for the exemption.
- Is an adjoining or contiguous property required to be vacant to qualify for the principal residence exemption?
No. The term “vacant” does not appear in MCL 211.7dd(c). An adjoining property must be unoccupied to qualify for the principal residence exemption. Eldenbrady v City of Albion, 294 Mich App 251, 816 NW2d 449 (2012).
- What is unoccupied property?
A property is considered unoccupied if it has no human occupants, such as tenants or residents, though it need not be completely empty. Occupancy is determined by the facts of each case, and the taxpayer bears the burden of proof. Eldenbrady v City of Albion, 294 Mich App 251 (2012).
- Chris owns Blue Acre, his principal residence. He also owns Red Acre, a residential classed parcel that adjoins Blue Acre which contains a dwelling where his caretaker lives. Is Red Acre eligible for the principal residence exemption?
No. Red Acre is occupied because the caretaker resides there, so it does not qualify for the principal residence exemption.
- Chris owns Blue Acre, his principal residence. He also owns Red Acre, a residential classed parcel that adjoins Blue Acre which contains a garage where he stores his vehicle. Is Red Acre eligible for the principal residence exemption?
Yes. Red Acre qualifies for the principal residence exemption because it is unoccupied, residential, and adjoining.
- Chris owns Blue Acre, his principal residence. He also owns Red Acre, a residential classed parcel that adjoins Blue Acre which contains a habitable dwelling where no one lives. Is Red Acre eligible for the principal residence exemption?
Yes. Red Acre qualifies for the principal residence exemption because it is unoccupied, residential, and adjoining, even though it contains a dwelling. The fact that Red Acre contains a habitable dwelling is irrelevant.
- Chris owns Blue Acre, his principal residence. He also owns Red Acre, a residential classed parcel that adjoins Blue Acre which contains a habitable dwelling where Chris’ children live rent fee. Is Red Acre eligible for the principal residence exemption?
No. Red Acre is occupied because Chris’ children live there, so it does not qualify for the principal residence exemption.
- Chris owns Blue Acre, his principal residence, Red Acre, a vacant classed residential parcel adjoining Blue Acre, and Purple Acre, a vacant classed residential parcel adjoining Red Acre. Purple Acre does not adjoin Blue Acre. Is Purple Acre eligible for the principal residence exemption?
Yes. Purple Acre qualifies for the principal residence exemption because it is unoccupied, classed residential, and adjoins Red Acre, Chris’ principal residence. Red Acre is considered Chris’ principal residence because it is unoccupied, classed residential, and adjoins Blue Acre, Chris’ other principal residence.
- Chris owns Blue Acre, his principal residence, Red Acre, a vacant classed commercial parcel adjoining Blue Acre, and Purple Acre, a vacant classed residential parcel adjoining Red Acre. Purple Acre does not adjoin Blue Acre. Is Purple Acre eligible for the principal residence exemption?
No. Purple Acre does not qualify for the principal residence exemption because it does not adjoin Blue Acre, and Red Acre’s commercial classification breaks contiguity, making both Red and Purple Acre ineligible. This is an example where classification of a property can break contiguity.
- Chris owns Blue Acre, his principal residence located in Delta Township, and Red Acre, a vacant classed residential parcel adjoining Blue Acre but is located in the City of Lansing. Does Red Acre qualify for the principal residence exemption?
Yes. Local tax unit boundaries do not break contiguity. Red Acre qualifies for the principal residence exemption because it is unoccupied, residential, and adjoining Blue Acre.
- Chris owns Blue Acre, his principal residence, and Red Acre, a vacant classed residential parcel. Blue Acrea and Red Acre are separated by St. Joseph Road and would adjoin but for this road. Does Red Acre qualify for the principal residence exemption?
Yes. Roads or rights-of-way do not break contiguity. Red Acre qualifies because it is unoccupied, residential, and adjoining Blue Acre.
- Chris owns Blue Acre, his principal residence, and Purple Acre, a vacant classed residential parcel. These parcels are separated by Red Acre which is owned by the City of Lansing. Blue Acre and Purple Acre would adjoin but for Red Acre. The City of Lansing grants Chris a road access easement across Red Acre so he can access Purple Acre from Blue Acre. Does Purple Acre qualify for the principal residence exemption?
No. Purple Acre does not qualify for the principal residence exemption since it does not adjoin Blue Acre. Red Acre breaks the contiguity, and a road easement does not create contiguity.
- Chris owns Blue Acre, his principal residence and Red Acre, a vacant classed residential parcel. Red Acre is an Island that sits in the middle of a lake. Blue Acre and Purple Acre would adjoin but for the lake. Does Red Acre qualify for the principal residence exemption?
Maybe. Red Acre may qualify for the principal residence if Chris owns the land under the water and the property lines from Blue Acre touch the property lines of the Red Acre. Note: Generally, an owner on a great lake (Michigan, Huron, Superior and Erie), owns only to the water’s edge. Whereas an owner on an inland lake in Michigan owns a pie-shaped portion of the bottomlands to the center of the lake. Since not all lakes are perfectly circular, the property lines may not converge at the exact middle point of the lake.
- Chris owns a condominium unit along with a boat slip and garage, which have separate property identification numbers. Is the boat slip and garage parcel eligible for the principal residence exemption?
Yes. The boat slip and garage parcel would qualify for the principal residence exemption. An owner of a condominium is also considered a partial owner of all the common areas. As such, the boat slip and garage are considered adjoining or contiguous to the owner’s principal residence.
- Can Chris claim a 15% principal residence exemption on adjoining property?
No. MCL 211.7dd(c) does not allow for partial exemptions on adjoining property. See Hardenbergh v County of Manistee, unpublished opinion per curiam of the Court of Appeals, issued November 24, 2015 (Docket No. 322605).
