Occupancy Requirement

Overview

This section explores the occupancy requirement for a principal residence exemption under MCL 211.7cc and MCL 211.7dd(a). It examines statutory definitions, case law interpretations, and practical implications for property owners, assessors, and legal practitioners.

To qualify for a principal residence exemption, MCL 211.7cc requires that the property be occupied as a principal residence by the owner of the property.

Courts interpret occupancy to mean residing permanently or continuously and using the property as a principal residence. Tenbusch v Michigan Department of Treasury, unpublished opinion per curiam of the Court of Appeals, issued March 5, 2019 (Docket No. 344239) & Schubert v Michigan Department of Treasury, 322 Mich App, 439; 912 N.W.2d 569 (2017). This requirement places the burden of proof on the owner, who must prove actual occupancy through documentary evidence. Mere statements of intent are insufficient.  Indicators of occupancy may include Driver’s license, voter registration, tax returns, utility bills, memberships, and other documents showing the property as the owner’s principal residence.

When an owner is temporarily absent, the principal residence exemption may be retained only if the owner demonstrates intent to return through documentary evidence and contextual factors such as length of absence, presence of non-owner occupants, leasing status, and location of personal effects. Again, mere statements are insufficient. Furthermore, the law provides special provisions for unique circumstances (Active-Duty Military, Nursing Home/Assisted Living Center/Convalescence, Demolished Dwelling) allowing owners to retain the principal residence exemption under strict conditions.  

For active-duty military, retention of the principal residence is permitted if the property is not rented, and the owner intends to return to the property as a principal residence.   If the property is rented, the owner must file Form 4660 (Active-Duty Military Affidavit) with the assessor by May 1. This allows the owner to retain the PRE for up to 3 consecutive years while the property is rented. 

For nursing home, assisted Living center or convalesce situations, an owner may retain a principal residence exemption if the owner manifests an intent to return by satisfying all of the following conditions: The owner continues to own the property; the owner has not established a new principal residence; the owner maintains or provides for the maintenance of the property; and the property is not leased and is not used for any business or commercial purpose.

For demolished home situations, if the property was vacated due to damage or destruction by an accident, act of God, or act of another person without the owner’s consent, the owner may retain the exemption on that property for the tax year in which the damage or destruction occurred and the immediately succeeding two tax years if the owner manifests an intent to return by satisfying all of the following conditions: The owner continues to own the property; the owner has not established a new principal residence; the owner provides for reconstruction of the principal residence for purposes of occupying the reconstructed dwelling upon its completion; and the property is not occupied, leased, or used for business or commercial purpose. No form is required.

Occupancy Scenarios: Frequently Asked Questions

1. Chris owns Blue Acre and claims it as his principal residence, but his driver’s license, tax returns, voter registration, vehicle registration, and mail all list his business address. Does he occupy Blue Acre as his principal residence?
   Chris has the burden of proof to confirm that he occupied Blue Acre as his principal residence. Current documents suggest he resides at his business. He can provide other evidence such as utility bills, insurance, bank statements, or pet licenses showing Blue Acre as his address. It’s also relevant whether his business has living quarters. If Blue Acre is his principal residence, he should update his driver’s license and voter registration to reflect his principal residence.
2. Chris owns Blue Acre and claims that property as his principal residence. Chris does not have a driver’s license, does not own a car, does not vote, and does not file income tax returns. Does Chris occupy Blue Acre as his principal residence?
   Chris has the burden of proof to confirm that he occupied Blue Acre as his principal residence. While Chris does not have a driver’s license, owns a car, vote, or file tax returns, he can still provide evidence of occupancy such as utility bills, insurance statements, bank statements, pet licenses and any other document showing Blue Acre is his principal residence.
3. Chris owns Blue Acre, located in Lansing and Red Acre, located in Houghton Lake. Chris claims Red Acre as his principal residence. His driver’s license and voter records list Red Acre, yet he works in Lansing, receives mail at Blue Acre, and Red Acre’s utilities show summer use only. Does he occupy Red Acre as his principal residence?
   Despite official records listing Red Acre, the totality of circumstances suggests Blue Acre is principal residence and Red Acre is a seasonal property. Specifically, the fact that all of Chris’ mail is delivered to Blue Acre, Chris works in Lansing, and the utility bills only indicate usage during the summer months suggests that Chris resides at Blue Acre and Red Acre was a seasonal home.
4. Chris owns Blue Acre and claims it as his principal residence. His legal documents list Blue Acre, but he is absent due to work. Can he retain the principal residence exemption while absent?
   If Chris previously occupied Blue Acre and intends to return to the property as a principal residence he can retain the principal residence exemption. Intent is shown through documents like driver’s license, voter registration, tax returns, utility bills, bank statements, and insurance policies. Other factors include where Chris keeps his personal possessions, length of absence, whether there are non-owner occupants, and if the property is leased.
5. Chris owns Blue Acre and claims it as his principal residence. Chris is in prison. Can he retain the principal residence exemption while he is in prison?
   If Chris previously occupied Blue Acre and intends to return to the property as a principal residence he can retain the principal residence exemption. Intent is evaluated case by case. Renting the property or serving a life sentence without parole indicates no intent to return.
6. Chris owns Blue Acre and claims that property as his principal residence. Chris resides in Florida for six months during the fall and winter months and Michigan for the remainder of the year. Can he retain the principal residence exemption while absent?
   If Chris previously occupied Blue Acre and intends to return to the property as a principal residence he can retain the principal residence exemption. The burden of proof rests with Chris, and while length of occupancy or absence is relevant it is not dispositive. Chris must provide objective evidence beyond a mere statement that demonstrates the property remained his principal residence while absent.
7. Chris owns Blue Acre as his principal residence but dies on July 27, 2021. Can the principal residence exemption remain on the property?
   Yes, for the 2021 tax year only. After death, the exemption must be removed as of December 31 of that year and cannot continue unless a new owner claims it.
8. Chris is on active duty in the Armed Forces of the United States, stationed in North Carolina. Chris purchased Blue Acre in Michigan and plans to live there upon retiring from the service in 20 years. Blue Acre is not rented. Does Chris qualify for the principal residence exemption on Blue Acre?
   No. To qualify, the property must have been owned and occupied as a principal residence. Since Chris never lived there, he is not eligible. An owner cannot claim an intent to return to a property if he or she never resided at the property as his or her principal residence initially.
9. Chris owned and occupied Blue Acre as his principal residence for 10 years. Due to his active duty obligations in the Armed Forces of the United States, he will be stationed in North Carolina for the next three years. The property will remain empty and not rented. Can Chris retain the PRE while absent?
   Since Chris did own and occupy the property as his principal residence and the property was not rented, Chris may be able to retain the principal residence exemption so long as he intends to return to the property as his principal residence.
10. Chris owned and occupied Blue Acre as his principal residence for 10 years. Due to his active duty obligations in the Armed Forces of the United States, he will be stationed in North Carolina. During his absence, he rented Blue Acre to Heather. Chris failed to file the Principal Residence Exemption Active Duty Military Affidavit (Form 4660). Can Chris retain the principal residence exemption while absent?
    No. When property is rented during active duty, the exemption is retained only if Form 4660 is filed by May 1 with the local assessor. Since Chris rented the property and failed to file, Form 4660 he is not eligible for those years.
11. Chris filed a timely Principal Residence Exemption Active Duty Military Affidavit (Form 4660) on April 1, 2018, and retained the principal residence exemption for three years. On April 1, 2021, Chris filed a second Principal Residence Exemption Active Duty Military Affidavit (Form 4660) since Chris is still absent because of his active duty military obligations and Blue Acre is still rented. Can Chris retain the principal residence exemption while he is absent for the year 2021 and subsequent years?
    No. Under MCL 211.7dd(c), the exemption can only be retained for three years when the property is rented while on active duty. Chris is not eligible for 2021 or later.
12. Chris filed a timely Principal Residence Exemption Active Duty Military Affidavit (Form 4660) in 2018 and retained the exemption on Blue Acre for the 2018 through 2020 tax years while on active duty. As of 2020, the property is no longer rented. Can Chris retain the principal residence exemption for 2021 and beyond?
    Since the property is no longer rented, Chris may be able to retain the principal residence exemption so long as he intends to return to the property as his principal residence and the property remains unrented.
13. Chris meets all conditions to retain the exemption while on active duty and renting the property. Must he file Form 4660 each year Blue Acre is rented?
    No. He only needs to file once by May 1 of the first rental year. He can keep renting and retain the principal residence exemption for up to three years if he intends to return to the property as his principal residence.
14. Chris moves to a nursing home in 2018 and is unlikely to return to the property as his principal residence due to health issues. The property is not leased. Chris’ driver’s license, voter records, and vehicle records still list the subject property as his residence. Can Chris retain the principal residence exemption while in the nursing home?
    Yes. If he owns the property, hasn’t established a new principal residence, maintains it, and the property is not leased or used for used for business or commercial purposes, he can retain the principal residence exemption.  Do not look at the illness and/or whether they can return to the property.
15. Chris moved to a nursing home in 2018. The property is unoccupied and not leased, but his driver’s license, voter records and vehicle records now list the nursing home. Can Chris retain the principal residence exemption while in the nursing home?
    Yes. If he owns the property, hasn’t established a new principal residence, maintains it, and it’s not leased or used for used for business or commercial purposes he can retain the principal residence exemption.
16. Chris moved to a nursing home but lets his son live in his home rent-free. He still owns the property, pays for utilities, and keeps personal possessions there. Can he retain the principal residence while in the nursing home?
    Yes. If he owns the property, hasn’t established a new principal residence, maintains it, and it’s not leased or used for used for business or commercial purposes he can retain the principal residence exemption.
17. Chris moved in with his daughter for health care in 2021 and lets his son live in his home rent-free. He still owns the property, pays for utilities, and keeps personal possessions there. Can he retain the principal residence while convalescing at his daughters’ home?  
    Yes. If he owns the property, hasn’t established a new principal residence, maintains it, and it’s not leased or used for used for business or commercial purposes he can retain the principal residence exemption.
18. What does convalescence mean?
    Convalescence is the recovery period after illness, surgery, or injury. It can occur at home or at a care facility. Example: a stroke patient rehabilitating at a relative’s home.
19. If the principal residence is demolished, how long can a person retain a principal residence exemption?
    If all intent to return requirements are met, the principal residence exemption can only be retained for the year of damage and the next two years. If reconstruction and re-occupancy are not completed within that period, the assessor must remove the exemption.