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Appellate Court: Having a roommate shouldn’t block Principal Residence Exemption

Marjory Collins
Library of Congress
Niagara Falls, New York. Elaine Colgan and her roommate, Alice, workers at the Bell Aircraft plant, share a room in Mrs. Hannegan's boardinghouse

Michigan homeowners can still claim an exemption against paying school taxes even if they have a roommate and share common areas. That's under a new ruling from the state Court of Appeals.

State law doesn’t let people claim the Principal Residence Exemption if they rent out at least half of their space.

But this week’s ruling states shared common areas don’t count toward that total.

“A person who rents a single room does not have possession and use of the entire house. They have possession of the room, while only having use of the remainder of the house,” the opinion reads.

The court observed there has been past confusion over the exemption, with different versions of state guidance seeming to contradict.

It noted guidance from before August 2022 fell in line with the court’s decision while the current stance seems at odds.

The Michigan Department of Treasury and State Tax Commission declined a chance to comment on the ruling.

Attorney Jon VanderPloeg represented the plaintiff in the case. He said the ruling covers a situation that’s going to keep coming up.

“As people, especially students … like nursing students here in Grand Rapids, they can’t afford to rent a full apartment and this kind of living situation is ideal for them and it’s a very good thing for the homeowner too,” he said.

He said it’s important the court cleared up the confusion.

“They believed they needed to publish the decision in order to clarify this in the future for everyone. They don’t publish many decisions these days and publication makes it binding precedent.”

That means it will apply to future cases that come up as well.