Michigan transfer tax: $8.60 per $1,000, paid by the seller

What are the two taxes?

Michigan taxes the transfer of real property under two separate laws. Both apply when the deed or sales contract is recorded.

The words “or fraction of $500” matter. A $200,100 sale counts as 401 units of $500, not 400.

The Wayne County Register of Deeds shows the two taxes together as $8.60 per $1,000 of value. That is $3.75 plus $0.55 for each $500. The register’s fee page lists only these two taxes, with no separate city tax.

The tax is based on the value of the real property, defined as its current fair market worth at the time of the transfer (MCL 207.522(g)). If a sale includes furniture or other personal property, the tax applies only to the real property, as long as the deed or an attached affidavit states the two values separately (MCL 207.525(2)).

Who pays the transfer tax?

The law puts the tax on the seller. The state act says the seller or grantor is liable (MCL 207.523(2)), and so does the county act (MCL 207.502(2)). A buyer may pay it on the seller’s behalf by agreement, and the state act recognizes that a buyer can do so (MCL 207.523(4)).

The state tax must be paid to the county treasurer where the property sits no later than 15 days after the deed is delivered (MCL 207.523(3)). In practice, it is collected when the deed is submitted for recording. See closing costs in Michigan for the other fees at the table.

Examples at different prices

These figures apply the Wayne County rates to round sale prices. They are examples, not quotes.

For a seller in Detroit, the tax on a $200,000 sale is therefore $1,720. For the local market, see the Detroit guide.

Which transfers are exempt?

The state act lists many exemptions (MCL 207.526). The most common for home sales and family transfers are:

• A transfer for less than $100 in consideration.
• A conveyance from a parent to a child or stepchild or adopted child, or to a grandchild.
• A conveyance between spouses that creates or ends a tenancy by the entireties.
• A deed or order from a court that does not set a price.
• A deed that confirms a title already held, such as a quitclaim deed that fixes a flaw.
• A deed given in foreclosure or in lieu of foreclosure of a mortgage. The exemption does not cover a later sale by the lender that foreclosed.
• A land contract, until legal title passes.
• A deed that creates a joint tenancy when at least one of the owners already owned the property.

One exemption is specific to homes. A sale is exempt if the seller claimed the principal residence exemption, the property’s state equalized value is no higher than it was on the first tax day after the seller acquired it, and the price is what a willing buyer and a willing seller would agree at arm’s length (MCL 207.526(u)). If you paid tax and think you qualified, the state act lets the seller, or the buyer who paid on the seller’s behalf, ask the Department of Treasury for a refund (MCL 207.523(4)).

The county act has a shorter list of similar exemptions (MCL 207.505). Ask the Register of Deeds how to claim an exemption when you record.