Property Tax Relief for Disabled Veterans

In late 2013, Governor Snyder told Michigan residents that “Michigan’s military veterans, particularly those who are disabled, have sacrificed more for us than we can ever repay. They have served to protect our way of life and our freedom.” As an acknowledgement of that sacrifice, the Governor signed the Dannie Lee Barnes Disabled Veteran Property Tax Relief Act, also known as Public Law 16, into law. Added Governor Snyder on the day of the signing, “This property tax break will be available to their families will help them afford homes and stay right here in Michigan.”

Thanks to this Act, property tax relief is now available for Michigan’s disabled Veterans and their un-remarried spouses. If you are a Michigan disabled veteran who has been honorably discharged from the U.S. armed forces, your real property used and owned as a homestead, or principal domicile, is exempt from the collection of Michigan property taxes under the General Property Tax Act. MCL 211.7b. Additionally, not only are disabled veterans able to receive the exemption, but if a qualified veteran dies before or after the property tax exemption is granted, the veteran’s un-remarried spouse may also qualify under the Act.

To qualify, you do not need to meet an income or asset test. This is not a tax break for low-income disabled veterans; rather, this is a tax exemption that applies to all qualified Michigan disabled veterans in response to their service.

How is a Disabled Veteran Defined?

The Act defines a disabled veteran as a resident of the State of Michigan who meets one of the following criteria:

1. Has been determined by the United States Department of Veterans Affairs (“USDVA”) to be permanently and totally disabled as a result of military service and entitled to veterans’ benefits at the 100% rate;
2. Has a certificate from the USDVA, or its successors, certifying that he or she is receiving or has received pecuniary assistance due to disability for specially adapted housing; or
3. Has been rated by the USDVA as individually unemployable.

How Can I Apply for the Disabled Veterans Exemption?

To claim the exemption, an affidavit must be filed annually by you, the property owner, or your legal designee, with the supervisor or other assessing officer. The affidavit must supply the facts required in the Act along with a description of the real property. There is no specific format required by the Act for the exemption affidavit. However, for uniformity and simplicity, Form 5107, the Affidavit for Disabled Veterans Exemption, was created and can be found online at the Michigan Department of Treasury website.

When Should I Apply?

For exemption of 2013 property taxes, the Affidavit for Disabled Veterans Exemption must be filed at the July 2014 Board of Review, as stated by the Michigan State Tax Commission. For other years, the affidavits may be filed at either the March, July or December Boards of Review as each will have the authority to review and grant the disabled veterans exemption.

If you are denied the exemption, any appeal you would like to make must be made to the Michigan Tax Tribunal by the filing of a petition.

Should All Disabled Veterans Apply?

As a qualifying veteran, before applying for the property tax exemption, you should weigh the net benefit of not paying real property taxes against the net income tax benefits of having the Michigan Homestead Property Tax Credit and, if you itemize deductions on your IRS Form 1040, the reduced federal taxes because of the deduction for real estate taxes paid. It is likely that most veterans will benefit more by having the disabled veterans property tax exemption rather than the tax credit and itemized deductions; however, it is a good idea to look at the bottom line for each option before applying for the exemption.

You can find additional information on the disabled veteran property tax exemption online in Bulletin 22 of 2013 issued by the Michigan State Tax Commission (12-16-13). For the link, CLICK HERE.

Marlaine C. Teahan chairs Fraser Trebilcock’s Trusts and Estates practice. She handles a wide variety of matters including: drafting wills, trusts and durable powers of attorney; trust and estate administration; guardianship and conservatorship matters; and probate litigation. She can be reached at mteahan@fraserlawfirm.com or 517.377.0869.