Transfer Tax Exemptions
Lower property value? Seller may be exempt . . .
With lower property values due to our struggling economy, many homeowners have been able to take advantage of an exemption contained in the Michigan Transfer Tax Act. If a seller meets the criteria, they would be exempt from paying the state transfer tax. Following are the criteria:
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The property must have been occupied as a principle residence – classified as homestead property.
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The property’s SEV for the calendar year in which the transfer is made must be less than or equal to the property’s SEV for the calendar year in which the seller acquired the property.
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The property cannot be transferred for consideration exceeding its “true cash value” for the year of the transfer.
For example:
If the SEV of the homestead principle residence when acquired in 2005 is $100,000 and the current SEV on the property is $90,000, then the first two criteria have been met. To establish the “true cash value” of the property, you must double the current SEV at the time of transfer. In this scenario, the true cash value would be $180,000. If the property sold for $170,000, then the 3rd criteria has been met of Exemption “u” as designated by the Michigan Transfer Tax Act.
If a past customer believes they may be eligible, they have up to 4 years from the transfer date to file for the exemption. It is also important to note that there are no similar exemptions in the County Real Estate Transfer Tax Act.
To determine eligibility
for Transfer Tax Exemptions, use the following
Transfer Tax Exemption Worksheet MCL 207.526(u).
Application for State Real Estate Transfer Tax (SRETT) Refund
When a seller pays the SRETT to the Register of Deeds, and later determines that the sale (transfer) of the real property was exempt from the SRETT, the Michigan Department of Treasury will process an application for a refund of the SRETT. Once the application information is verified, Treasury will issue a check payable to the seller for the amount of the SRETT. The application must be filed within four years from the date the tax was paid. Questions can be directed to the Customer Contact Division at 517-636-4700.
Complete list of Michigan Transfer Tax Exemptions
