Eighteen Mills: Glen Arbor Pays a School Tax That Most of Elmwood Skips

Page 57 of the 2025 Leelanau County equalization report is a form called an L-4046, and column 15 on it might be the least glamorous number in county government. It shows how much of each township's taxable value carries a principal residence exemption. In Glen Arbor Township, 25%. In Elmwood Township, about 70%.

Same county. Half an hour apart on M-22.

Michigan lets a local school district levy up to 18 mills for operating costs, and a house that is somebody's full-time home is exempt from all of it. A house that isn't pays every one of those mills. So three out of every four dollars of taxable value in Glen Arbor are paying a school operating tax that most of Elmwood skips.

Eighteen mills is $18 per $1,000 of taxable value. Buy an $800,000 cottage and your taxable value resets to roughly half of that, so call it $7,200 a year. That's a car payment, and it's a separate thing from the uncap, which is the other tax surprise up here and the one buyers have at least heard of.

I should caveat that column before building a whole article on it. Column 15 bundles the principal residence exemption together with Qualified Forest and Qualified Ag, so in orchard townships like Bingham and Centerville the number gets flattered by farm ground rather than by full-time residents. The low numbers are the trustworthy ones. Glen Arbor at 25%, Leland at 38%, Leelanau Township at 36%, the Village of Suttons Bay at 34%. Those are second-home towns and the tax rolls say so in a way no listing description ever will. (The percentages are mine, not the county's. The report prints the two dollar figures and leaves the division to you.)

Which direction your bill moves depends on who sold you the house

The tax figure printed on a listing is the seller's bill. Whether yours goes up or down from there has less to do with the house than with who was sleeping in it.

Buy a full-time local's place in Elmwood and move in yourself, and the exemption survives once you file the form. Your bill changes because of the uncap, not because of the 18 mills. Buy that same house as a second home and the exemption is gone, and 18 mills lands on top of the uncap. Two increases, two different mechanisms, one tax bill, and the estimate on the listing sheet accounts for neither.

It runs the other way too, which is the version we see more often in Glen Arbor and around Lake Leelanau. A summer family sells a place they've owned since the Reagan administration. They never had the exemption, because it was never their principal residence. The tax history looks brutal on paper. Then a buyer who's moving up here full-time files the affidavit and knocks 18 mills off the number they'd been bracing for. That rarely comes up in advance, because the listing is quoting history and the lender is quoting the seller's escrow.

The form, and the seven weeks you have left

Form 2368, the "Principal Residence Exemption (PRE) Affidavit," runs one page and goes to your township or city assessor, not to the county and not to the title company.

There are two deadlines. File by June 1 and you get the exemption on that year's summer levy and everything after it. November 1 gets you the winter levy onward. It's September 12 as I write this, so if you closed this summer and nobody put that form in your hand, you've got about seven weeks.

Michigan law says plainly that a closing statement preparer's failure to give you the form "does not create a cause of action at law or in equity." Meaning if it doesn't get filed, that's yours to own.

I'd check even if you're fairly sure it was handled. The misses cluster in a few predictable spots: out-of-state buyers, land contracts, estate sales, and properties that had been non-exempt so long that everyone in the chain assumed they'd stay that way.

The seller's side of this is worse

If you sold a Michigan home that had the exemption and you don't rescind it, you have 90 days to file Form 2602. The penalty for blowing that is $5 a day, capped at $200, which is the cheap part.

The expensive part is that a local assessor, the county, or the Department of Treasury can deny a principal residence exemption for the current year plus the three immediately preceding calendar years, and the corrected bill carries interest at 1.25% per month. That's 15% a year on a bill that can already run five figures on a waterfront parcel.

There's a useful provision for one situation we run into constantly up here, which is that you found the place in Leelanau, you closed on it, and the house downstate still hasn't sold. That's a conditional rescission, Form 4640. You keep the exemption on the old house for up to three tax years as long as it's unoccupied, for sale, not leased, and not used for any business or commercial purpose. Treasury's position is that it doesn't have to be listed with an agent, only really for sale.

Then there's the December 31 problem. You have to re-verify a conditional rescission with the assessor by that date every single year, and a missed filing can't be fixed after the fact. The Board of Review has no authority over conditional rescissions at all. Miss the date and that year is gone.

Short-term rentals and the 50% line

This is the question we get most often, and the answer surprised me when I went and read the statute.

Renting residential property for fewer than 15 days in a calendar year doesn't count as a "commercial purpose" under Michigan's definition at all. Past that, the law says your principal residence still includes a portion you rent out, so long as that portion stays under 50% of the total square footage of living space in the house.

The Court of Appeals went further in 2022. A man on Lake Superior was renting three rooms of his home on Airbnb year-round, roughly 30% of the place, and the Tax Tribunal cut him down to a 70% exemption. The appeals court gave him the full 100%, on the logic that if renting your entire house for part of the year doesn't disqualify it, renting part of your house for part of the year can't either. Treasury has since folded that reasoning into its own guidance.

So the spare bedroom you list during Cherry Festival week probably isn't costing you anything. Renting the whole house most of the year is a different conversation, and it's the one that trips people up. If rental income is the entire point of the purchase, the exemption was never going to be yours, and there's considerably more to sort out than this one form. Our short-term rental guide gets into the township-by-township side of it.

What I'd do first

Call the township assessor. Not the county and not your lender. Ask two things: does this parcel currently carry a principal residence exemption, and what's on file for it.

Assessors in Leelanau and Grand Traverse pick up the phone, and they'll tell you. It takes about four minutes and it's the cheapest piece of due diligence in a Northern Michigan transaction.

I don't know how Treasury is prioritizing audits right now and I won't pretend otherwise. What I do know is that the exposure reaches four years back at 15% a year, and the form takes ten minutes to fill out.

If you're looking at something in Glen Arbor or Elmwood and want to know which side of column 15 you'd be standing on, just ask. We've got the report open.

Taylor Brown, Realtor
Taylor@taylorbrownrealtor.com
(231) 360-1510