Every year, Michigan homeowners leave money on the table because they don't realize they qualify for property tax relief. Two programs — the Principal Residence Exemption (PRE) and the Homestead Property Tax Credit — can save homeowners hundreds of dollars annually, yet many don't know these programs exist, don't understand how they differ, or aren't sure whether they qualify. After walking countless clients through Michigan's property tax landscape, I want to break both programs down in plain language so you can take advantage of every dollar available to you.

The Principal Residence Exemption (PRE): The One Most Homeowners Already Have

The Principal Residence Exemption is the more widely known of the two programs. If you own and occupy your home as your primary residence, you've likely already claimed the PRE — though some homeowners don't realize it, and others accidentally lose it.

The PRE exempts your home from up to 18 mills of local school district operating taxes. In practical terms, that can mean a savings of several hundred dollars per year, depending on your home's taxable value and your local millage rate. On a home with a taxable value of $150,000, for example, 18 mills of school operating tax would represent $2,700 in annual taxes — and the PRE eliminates that entirely.

To qualify, you must:

Own the property. You must hold legal title — whether you have a mortgage or own it outright.
Occupy it as your principal residence. This is your primary home, not a vacation property or rental.
File with your local assessor. The PRE is claimed by filing an affidavit (Form 2368) with your local city or township assessor. In most cases, this is done automatically at the time of purchase with help from the closing agent, but it's worth confirming.

When the PRE Can Be Lost or Revoked

The PRE isn't permanent by default. It can be lost in several situations:

Converting to a rental. If you move out and rent the home, you must notify your local unit of government. The PRE will be revoked, and the school operating mills will be added back to your tax bill (or your tenant's, if passed through).
Filing for a second PRE. If you claim the PRE on a second property — say you buy a new home before selling the old one — the local assessor may revoke the exemption on one of the properties. You can only have one PRE at a time.
Failure to respond to annual mailings. Some local units of government send annual verification mailings to PRE holders. If you don't respond, the exemption may be revoked.

The good news is that the PRE is easy to reinstate once you're back in compliance. If you've had your PRE revoked and aren't sure why, contact your local assessor's office. They can tell you exactly what happened and what steps to take.

The Homestead Property Tax Credit: The One Most Homeowners Don't Know About

This is the program I want to focus on, because it's the one that most often gets overlooked. The Michigan Homestead Property Tax Credit is a refundable state income tax credit designed to help residents whose property taxes or rent represent a significant portion of their household resources. Unlike the PRE, which is an exemption from certain taxes, this is a direct credit — meaning it can reduce your state tax liability or result in a refund check.

Who Qualifies?

For the 2025 tax year, you may qualify for the Homestead Property Tax Credit if:

You were a Michigan resident for at least six months of the tax year (or your surviving spouse was).
Your total household resources are $71,500 or less. "Household resources" includes taxable and nontaxable income — wages, Social Security benefits, pensions, interest, dividends, and other sources.
Your homestead's taxable value is $165,400 or less. This is the taxable value, not the assessed or market value. Remember, thanks to Proposal A, the taxable value is typically lower than the assessed value.
Your property taxes or rent (a portion of which is considered property tax) exceed a certain percentage of your household resources.

How Much Can You Receive?

The maximum credit is $1,900 for the 2025 tax year. The actual amount you receive depends on the relationship between your household resources and your property taxes or rent. The credit is designed to help when your tax burden is disproportionately high relative to your income — and for many Michigan homeowners on fixed incomes, it provides meaningful relief.

How to Apply

Applying for the Homestead Property Tax Credit is straightforward:

File Form MI-1040CR with your Michigan individual income tax return (Form MI-1040). The form is titled "Homestead Property Tax Credit Claim."
If you're not required to file a Michigan income tax return, you can file the MI-1040CR separately.
You'll need your property tax statement or summer and winter tax bills, your total household resource information, and your Social Security number.
The filing deadline follows the state income tax deadline — typically April 15 of the following year.

One important note: renters can also claim this credit. If you rent your home and your landlord charges you rent that includes a portion for property taxes, you may be eligible. You'll need a Renters Certification Form (Form MI-1040CR) and a statement from your landlord showing how much of your rent goes toward property taxes.

PRE vs. Homestead Property Tax Credit: Key Differences

These two programs are often confused because they both relate to homestead property taxes, but they work very differently:

The PRE is an exemption from school operating taxes. It's filed locally with your city or township assessor. It reduces the taxes you owe directly. There is no income limit.
The Homestead Property Tax Credit is a state income tax credit. It's filed with your Michigan tax return. It provides a credit or refund based on the proportion of your income that goes toward property taxes or rent. It has income and property value limits.

The most important takeaway: you can benefit from both programs simultaneously. If you qualify for the PRE (which most owner-occupants do) and your household resources fall under the income threshold for the Homestead Property Tax Credit, you can claim both — stacking your savings.

Real-World Example: How These Savings Add Up

Consider a retiree living in a home in Davison with a taxable value of $130,000 and total household resources of $50,000 (Social Security and a small pension):

The PRE exempts them from 18 mills of school operating tax — saving approximately $2,340 per year.
The Homestead Property Tax Credit, based on their income and tax burden, could provide an additional credit of up to $1,900.
Combined, that's potentially $4,240 per year in property tax relief — real money for someone on a fixed income.

And yet, many homeowners in this exact situation don't claim the credit because they don't know it exists, or they assume it's only for low-income households. The income threshold of $71,500 covers a wide range of Michigan homeowners.

Common Questions I Hear From Clients

"I already have the PRE — do I need to do anything every year?"

Generally, no. Once the PRE is on file, it remains in place as long as you continue to occupy the home as your principal residence. However, some local units of government send annual verification postcards. If you receive one, respond to it — failure to respond can result in the exemption being revoked.

"I bought a new home but haven't sold my old one yet. Can I have the PRE on both?"

No. You can only claim the PRE on one property. If you purchase a new home before selling the old one, you can file the PRE on the new home and request a " Conditional" status on the old one for up to one year while you sell it. Work with your local assessor and your REALTOR® to handle this properly.

"Does the Homestead Property Tax Credit apply to me if I have a mortgage?"

Absolutely. Whether you own your home free and clear or have a mortgage, the credit is based on the property taxes you pay (which are typically included in your mortgage payment via escrow). You'll receive your property tax information from your lender and can use it to file the MI-1040CR.

"I'm selling my home — does this matter?"

It can. If you're selling, make sure your PRE status is current. A buyer will want to know that the property tax figures they're seeing reflect the PRE, since their taxes will likely be higher after the taxable value uncaps at sale. If you're a seller on a fixed income who qualifies for the Homestead Property Tax Credit, make sure you've claimed it for every year you've owned the home.

Take the Fifteen-Minute Action Step

If you're a Michigan homeowner and you're not sure whether you're receiving every property tax benefit available to you, here's what I recommend:

Verify your PRE is on file. Call your local city or township assessor and confirm. It takes two minutes.
Check whether you qualify for the Homestead Property Tax Credit. If your household resources are $71,500 or less and your homestead's taxable value is $165,400 or less, it's worth investigating.
Talk to your tax preparer. If you file your own taxes, look at Form MI-1040CR. If you use a CPA or tax software, ask them directly whether you're claiming the credit.
Don't leave money on the table. The credit has been available for years, and some homeowners are owed refunds for prior years if they missed filing.

How This Fits Into Your Bigger Picture

Understanding property taxes is one of the most important parts of smart homeownership. Whether you're buying your first home, budgeting for your current home, or preparing to sell, knowing what exemptions and credits are available to you can make a meaningful difference. I discuss property taxes with every client — it's part of the full-service approach I bring to every transaction.

If you have questions about how property taxes work in your specific community — or if you'd like a broader review of your homeownership costs — schedule a consultation or call me at 810-513-3335. I'm always happy to help you keep more of your hard-earned money.

Michigan Homestead Exemption: What Every Homeowner Needs to Know