Disclaimer: The following information represents The Tim Sova Team’s Best Good Faith Opinion on Michigan Real Estate Transfer Tax Exemptions. All information must be independently verified.
Source listed below article.
The State of Michigan allows numerous exceptions to paying Real Estate Transfer Taxes (see further reading below) This article will focus on determining whether home sellers may be eligible for a Transfer Tax Exemption under MCL 207.526(t) *Note: recently subsection (t) was changed to subsection (u) by the Michigan Legislature.
Attorney General, Mike Cox, published opinion 7214 in 2008 stating that homeowners may qualify to exempt payment of the State portion of Transfer Tax on their primary residence if they meet certain conditions AND if the there was an actual price decrease from date of purchase compared to twice the State Equalized Value (SEV) of a primary residence in the year of sale. (see estimate table below)
The Tim Sova Team created a simple table to assist homeowners in estimating whether they may be eligible for a State Transfer Tax Exemption. While this exemption offers potential relief to home sellers (in a declining market) we hope
Very generally, the State Real Estate Transfer Tax Act places a tax upon most transfers of real property. Unless otherwise negotiated, home sellers are required to pay the transfer tax. The tax is generally due at the time that the deed is offered to the Register of Deeds for recording. However, there are also several exemptions from the tax. (see further reading for lists of exemptions provided by the
Only for the State of
WARNING: If after an exemption is claimed under this subsection, the sale or transfer of property is found by the treasurer to be at a value other than the true cash value, then a penalty equal to 20% of the tax shall be assessed in addition to the tax due under this act to the seller or transferor.
Already sold your home? This section may provide relief. If the seller does not claim an exemption and later determines that the finalized SEV and true cash values would justify a claim, a refund may be sought at that time from the Michigan Department of Treasury.
Table compiled based upon our best good faith opinion of information provided by
Attorney General’s Opinion 7214. See entire opinion in Further Reading
1 Is the property currently claimed as a If “Yes” continue If “NO” STOP, you cannot claim the exemption | Yes | No |
2 What is the SEV for 20__ (“Current SEV”) | $___________ | |
3 What was the SEV on the date of purchase? | $___________ | |
Is the answer #2 less than or equal to #3 answer? If “Yes” continue to #4 If “NO” STOP, you cannot claim exemption | Yes | No |
4 Multiply the answer #2 by 2.0 | $___________ | |
5 What was the original purchase price? | $___________ | |
6 Is the answer #5 less than or equal to answer #4? | Yes | No |
IF THE ANSWER TO #6 IS “NO” THE TRANSACTION IS NOT EXEMPT FROM THE STATE TRANSFER TAX. |
Note: claiming of exemption requires notarized completion of AFFIDAVIT OF TRANSFER TAX EXEMPTION MCL 207.526(u) and may be subject to a penalty equal to 20% of the tax shall be assessed in addition to the tax due under this act to the seller or transferor. The Tim Sova Team requires independent verification of all facts and completion of a “Hold Harmless” agreement prior to attempting to claim your Transfer Tax Exemption MCL 207.526(u). Contact Us for further information.
Further Reading Suggestions
Frequently Asked Questions (State of MichiganTreasury Dept Site)
County Real Estate Tax Exemptions
State Real Estate Tax Exemptions
Attorney General Opinion No. 7214 in entirety
