People who buy a house in Michigan and receive their property tax bill for the first winter often say things like, "Why is our tax so much higher when the house next door is similar in value?"

When you hear their stories, the cause is usually one thing: they did not submit the application for the Principal Residence Exemption, commonly known as PRE.

PRE stands for Principal Residence Exemption. It was previously referred to as the homestead exemption.

According to the Michigan Department of Treasury, receiving this exemption allows homeowners to be exempt from up to 18 mills of the school operating tax levied by local school districts. Conversely, homes that do not apply will pay that full 18 mills.

A mill represents one dollar for every $1,000 of taxable value. So, 18 mills means $18 for every $1,000 of taxable value.

Let's simplify the calculation. If a home has a taxable value of $100,000, then 18 mills would amount to $1,800 per year.

It's important to note that taxable value is not the same as market value. Michigan has separate measures for SEV, which is half of the market value, and Taxable Value, which has limited increases, so you need to check the number listed on your tax bill.

However, once a house is sold and ownership transfers, the taxable value cap is lifted the following year, resetting to the SEV level. The new owner will already face a tax increase, and if they miss out on the PRE, the burden compounds.

The next question is, how long do you have to apply? The application is Form 2368, and the deadlines are twice a year, on June 1 and November 1.

If you apply by June 1, it will be reflected in the summer tax bill of that year. If you apply after June 1 but by November 1, it will be reflected in the winter tax bill of that year and thereafter.

As I write this, it happens to be just after the November 1 deadline. This year, November 1, 2026, falls on a Sunday, so it's best to check directly with the local assessor's office about how weekend deadlines are handled.

The application is submitted to the assessor's office of the city or township where the house is located, not the state government. If the address is in Lansing, then the Lansing City Assessor's Office is the place to go.

Even within Lansing, the assessments can vary slightly. Lansing spans Ingham, Eaton, and Clinton counties, and depending on the address, the school district may differ, leading to variations in other items on the tax bill.

Still, the principle of the 18 mills of school operating tax being exempt with PRE remains the same regardless of the neighborhood. That's why I advise checking whether you applied before considering the neighborhood.

Those who miss the deadline often wonder if they can reclaim the previous year's exemption. Since the law was amended in 2022 (Public Act 141 of 2022), the process has changed a bit.

Previously, you could go to the Board of Review in July or December to receive a late exemption. Now, that authority has been removed, and instead, you must submit Form 2368 directly to the assessor's office.

According to the Michigan Municipal League (MML), you can claim for the current year and the previous three years. If the assessor requires proof that you actually owned and lived in the home during that time, you must provide it within 30 days.

The process for getting back taxes already paid may vary by county and locality. I won't make any definitive statements about that.

Let's also clarify the eligibility criteria. You must be a Michigan resident and actually live in the home as your primary residence.

Rental properties or vacation homes do not qualify. I've seen several cases where people mistakenly applied PRE to investment condos only to have it revoked later.

In such cases, the exemption is canceled, and interest is added to the unpaid taxes. According to local government guidance, denial of the exemption can be retroactive to the current year and the previous three years.

Those moving out also have responsibilities. If the property is no longer your primary residence, you must apply for exemption cancellation using Form 2602.

If you buy a new home but haven't sold your old one, there is a conditional cancellation process (Form 4640). If you meet the conditions, you can maintain exemptions on both homes for up to three years, but you must submit verification documents each year.

If you're buying, don't assume the previous owner's exemption will automatically transfer. Sometimes, Form 2368 is buried in the closing documents, and many people don't check whether it was signed and submitted.

That's why I recommend taking care of two things after closing: submitting the PRE application and filing the Property Transfer Affidavit within 45 days.

Verification is not difficult. If the PRE percentage is showing as 100% on your tax bill or county online lookup, then everything is normal; if it's 0%, it means it hasn't been applied yet.

Hearing that a $1,800 tax savings is tied to a single piece of paperwork might feel a bit disheartening at first. I've been in this field for a long time, but it's rare to find such an easy and effective tax-saving opportunity.

This article is based on information from the Michigan Department of Treasury and local government public records as of early November 2026. Individual circumstances may vary, so please confirm with your local assessor's office for final determinations.