Michigan State Transfer Tax Exemption
In 1993, the State of Michigan implemented the state real estate transfer tax. When a home is sold in Michigan, there is a transfer tax that must be paid by the seller. This tax is based on the sale price of the home and is equivalent to $7.50 per $1,000 or the sales price on all home sales (unless the transaction is exempted under the statute).
There is a portion of this statue that can potential help some sellers. It has been on the books for years but is only coming to light due to our recent decline of values. If the current owner sells their property and the current assessed value is less then when they purchased the property, they do not have to pay the State Transfer Tax.
This could affect owners that have purchased a property in the top of the market and are now forced to sell at a loss. Since the tax is calculated on the "Sales Price", some due diligence must be done to find out if your seller qualifies for this exemption. This is not the duty of the title company, it is your accountability duty to your client to research this information and find out if they are eligible for the exemption. This could potentially save your client thousands of dollars depending on the price of the home.
This exemption only applies to the STATE tansfer tax. There are NO exceptions to the COUNTY transfer tax.
231-944-0854
www.northernmichiganrealestatecs.com
Coldwell Banker Schmidt Realtors
402 E. Front St. Traverse City, MI 49686
Christine Stalsonburg, Realtor
Re/Max Bayshore Properties
231-409-4140
Traverse city one of my favorite places to go as a kid. I grew up in Grand blanc and my cousin owned the christmas store downtown for years we came up every cherry festival.
We are gearing up for Cherry Festival, it will be here before we know it. There is nothing like shopping downtown TC at Christmas time when the snow is falling. OH, I love winter.
Thanks Christine. I was not aware of this and will now keep it in mind as many properties are now selling at 1990 prices. Good information.
Another tip to remember on the transfer tax as it relates to a land contract is that the tax is not due until the final payments are made and the transaction is recorded into the new owners name. If you are representing the buyer, make sure that there are sufficient escrow holdbacks for this transfer tax to be paid from the seller proceeds or your buyer will be responsible for paying the tax in order to transfer the deed.