                          STATE OF MICHIGAN

                           COURT OF APPEALS



WAYNE A. SMITH,                                                     FOR PUBLICATION
                                                                    February 13, 2018
               Petitioner-Appellant,                                9:00 a.m.

v                                                                   No. 335644
                                                                    Tax Tribunal
TOWNSHIP OF FORESTER,                                               LC No. 15-004331-TT

               Respondent-Appellee.


Before: RONAYNE KRAUSE, P.J., and FORT HOOD and O’BRIEN, JJ.

PER CURIAM.

        Petitioner appeals by right the judgment of the Michigan Tax Tribunal (MTT) denying
his request for a poverty exemption from his 2015 property taxes. We affirm.

       Petitioner applied for a poverty exemption for his principal residence located in Forester
Township. Respondent’s poverty exemption guidelines provided that an exemption would be
denied if the applicant’s assets exceeded $4,500 or if the applicant’s income exceeded the federal
poverty guidelines, which at that time was $11,770 for a household of one. Respondent’s
guidelines also indicated that reverse mortgage1 payments would be “added” to an applicant’s
income. In his application, petitioner calculated his assets at over $9,000. He also disclosed that
he received over $10,000 in social security retirement payments and that he had received over
$12,000 in reverse mortgage payments that tax year. Respondent’s board of review denied the
request for an exemption on the ground that petitioner had “adequate resources.”




1
  A “reverse annuity mortgage” is defined as “[a] mortgage in which the lender disburses money
over a long period to provide regular income to the (usu. elderly) borrower, and in which the
loan is repaid in a lump sum when the borrower dies or when the property is sold.” Black’s Law
Dictionary (9th ed). “A home equity conversion mortgage, more commonly called a ‘reverse
mortgage,’ allows a homeowner over the age of 62 to borrow money based on his or her home
equity.” 21 ALR7th Art 4.


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        Petitioner then appealed to the MTT Small Claims Division, contending that respondent’s
asset limit was unduly restrictive.2 Respondent maintained that it denied the exemption because
petitioner’s income exceeded the poverty guideline. The hearing referee, relying on IRS
Publication 936 (2015), found that reverse mortgage payments should not constitute income and
that petitioner’s income was sufficiently low when those payments were excluded. The referee
noted that petitioner still exceeded the asset limit, but nonetheless found a substantial and
compelling reason to deviate from the guidelines because it would be unreasonable to require
petitioner to sell his vehicle in order to pay his property taxes. Respondent filed exceptions to
the proposed opinion and order, primarily arguing that reverse mortgage payments should be
treated as income for poverty exemption purposes.

        In its final order and judgment, the MTT agreed with respondent. Relying on an
unpublished opinion from this Court, the MTT concluded that it was irrelevant that reverse
mortgage payments were not taxable income. The MTT found that the reverse mortgage
payments were available to petitioner to pay his property taxes. Given that ruling, the MTT
found it “unnecessary to evaluate [petitioner’s] eligibility under the asset test,” but nonetheless
found that there were not “substantial and compelling reasons to grant the exemption when
considering both the income and the asset tests.” Petitioner filed a motion for reconsideration,
which the MTT denied because petitioner “failed to demonstrate that he was unable to contribute
to the public charge as required by MCL 211.7u and is not eligible for the exemption.”

        On appeal, petitioner challenges the MTT’s final judgment and its denial of his motion
for reconsideration. If fraud is not alleged, the MTT’s decision is reviewed “for misapplication
of the law or adoption of a wrong principle.” Wexford Med Group v City of Cadillac, 474 Mich
192, 201; 713 NW2d 734 (2006).

        The poverty exemption from property taxes on a principal residence is governed by § 7u
of the General Property Tax Act (GPTA), MCL 211.1 et seq., which provides in pertinent part as
follows:

               (1) The principal residence of persons who, in the judgment of the
       supervisor and board of review, by reason of poverty, are unable to contribute
       toward the public charges is eligible for exemption in whole or in part from
       taxation under this act. This section does not apply to the property of a
       corporation.

               (2) To be eligible for exemption under this section, a person shall do all of
       the following on an annual basis:

                                             * * *




2
  Petitioner also challenged the assessment of the property’s value for 2015 and 2016. Those
issues are not relevant to this appeal.


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               (e) Meet the federal poverty guidelines updated annually in the federal
       register by the United States department of health and human services under
       authority of section 673 of subtitle B of title VI of the omnibus budget
       reconciliation act of 1981, Public Law 97-35, 42 USC 9902, or alternative
       guidelines adopted by the governing body of the local assessing unit provided the
       alternative guidelines do not provide income eligibility requirements less than the
       federal guidelines.

                                             * * *

               (4) The governing body of the local assessing unit shall determine and
       make available to the public the policy and guidelines the local assessing unit uses
       for the granting of exemptions under this section. The guidelines shall include but
       not be limited to the specific income and asset levels of the claimant and total
       household income and assets.

               (5) The board of review shall follow the policy and guidelines of the local
       assessing unit in granting or denying an exemption under this section unless the
       board of review determines there are substantial and compelling reasons why
       there should be a deviation from the policy and guidelines and the substantial and
       compelling reasons are communicated in writing to the claimant. [MCL
       211.7u(1), (2)(e), (4), and (5).]

        With respect to the MTT’s denial of petitioner’s motion for reconsideration, petitioner
argues that the MTT erred by not restricting its analysis to whether petitioner satisfied the
income and asset tests. With respect to the MTT’s final judgment, and the thrust of petitioner’s
argument on appeal, is that the MTT erred by treating reverse mortgage payments as income
rather than assets. Neither argument, however, provides petitioner with a means for appellate
relief. If we accept petitioner’s arguments, petitioner’s resulting assets would exceed the asset
limit set in respondent’s guidelines, and, therefore, he would fail the asset test and still be
precluded from claiming the poverty exemption.

        On petitioner’s application for the poverty exemption, he listed his assets as $9,328.59.
In the MTT, he argued that his automobile, which had an estimated value of $6,250, should not
be counted in this estimation. If we accept this argument without assessing its merit, then
petitioner’s assets listed on his application were $3,078.59. Petitioner argues on appeal that his
reverse mortgage should have been considered an asset, not income. Petitioner’s reverse
mortgage was in excess of $12,000. Thus, accepting this argument as well, petitioner’s assets
totaled over $15,000.3 This is well in excess of the $4,500 limit. Granted, the MTT did not


3
  In the context of arguing that the reverse mortgage was not income, petitioner points out that
“the equity of the homestead is treated as a protected or exempted asset,” and then rhetorically
asks,
       [W]hy does it become non-protected and nonexempt once it is converted into
       money? And if a petitioner cannot be required to ‘borrow against the equity to


                                               -3-
expressly address the asset test, but it did find that “there is insufficient information on record to
demonstrate such substantial and compelling reasons to grant the exemption when considering
both the income and the asset tests.” Petitioner does not challenge that part of the MTT’s
decision on appeal.

        Accordingly, even assuming that the MTT erred by considering petitioner’s reverse
mortgage as income, we would nevertheless affirm the MTT’s decision because it would have
properly determined that petitioner did not qualify for the poverty exemption, albeit for the
wrong reasons. See Taylor v Laban, 241 Mich App 449, 458; 616 NW2d 229 (2000). Under
these circumstances, petitioner’s arguments effectively present moot questions that we need not
address. See B P 7 v Bureau of State Lottery, 231 Mich App 356, 359; 586 NW2d 117 (1998).

       Affirmed.


                                                              /s/ Amy Ronayne Krause
                                                              /s/ Karen M. Fort Hood
                                                              /s/ Colleen A. O'Brien




       pay the taxes’, why would the occurrence of such an event result in a different
       result as to the right to a poverty exemption?
This may be construed as an argument that a reverse mortgage should be considered a protected
asset. Assuming that this argument was properly before this Court, which it is not due to
petitioner’s failure to develop the argument, see Prince v MacDonald, 237 Mich App 186, 197;
602 NW2d 834 (1999), we note that treating reverse mortgage payments as an asset does not
require a property owner to borrow against his or her home equity to pay property taxes. Rather,
in the event that a reverse mortgage is executed, the amount would be considered an asset for
purposes of the poverty exemption.
       Further, not including a reverse mortgage as either an asset or income for purposes of the
poverty exemption would undermine the intent of the exemption. Theoretically, a taxpayer
could own a $2,000,000 home, have no income and assets below the asset limit, and execute a
$100,000 reverse mortgage. Under petitioner’s proposed interpretation, this theoretical taxpayer
could claim the poverty exemption, despite having the ability to contribute toward the public
charges.


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