On December 27, 2012, HR-4753 was signed into law by Michigan Gov. Rick Snyder. As stated in our previous blog, "HR-4753: An Early Christmas Gift for Michigan Cottage Owners!", this bill allows parents to transfer residential real estate to a child after December 31, 2013 without triggering an uncapping of the property taxes.
As discussed in our earlier blog, "Proposed Legislation to Prevent Cottage Uncapping - A Benefit to Cottage Owners? Or a Curse in Disguise?", this bill amends the General Property Tax Act to allow parents to transfer residential real estate to a child(ren) without triggering an uncapping of the property taxes. It should be noted that this bill is only effective for transfers after December 31, 2013 and the use of the property must not change following the transfer.
Although this bill is a win for cottage owners, it fails to address the issues discussed in our previous blog regarding the impact of this bill on properties that are owned by or transferred to a trust. In addition, the bill does not address the concerns regarding the future management of a cottage, which many times will outweigh any tax concerns of a cottage owner.
A complete cottage plan should address concerns related to both taxes and the ownership and management of the cottage by the next generation.© 2013 Varnum LLP