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February 17 2016

Sell Your Home Recently? You May be Eligible for a Transfer Tax Refund

By: Kimberly M. Large

Like many in West Michigan, you may have felt the financial pinch of the recent housing crisis, where property values dropped significantly and it was increasingly difficult to qualify for financing.  A bit of good news is that it is now easier for qualifying sellers to get back money they paid on their state transfer tax in recent years. 

In December, the Michigan Legislature amended the Michigan Real Estate Transfer Tax Act to allow many homeowners to claim an exemption from payment of the transfer tax on sales of their principal residence.  Sellers who meet the following three (3) requirements are exempt from paying the state transfer tax and are entitled to a real estate transfer tax refund if they sold their property within about the last four years.  The requirements follow:

  1. The seller occupied the property as a principal residence at the time the property was sold.
  2. The property’s State Equalized Value (SEV) at the time it was sold was lower or equal to the SEV on the date the seller bought the property.
  3. The sale price was the result of “arms length” negotiations (each party bargaining for their own self-interest) between the seller and buyer.

If sellers meet the above requirements, they are exempt from paying the state transfer tax, and they can get a refund of the state transfer tax they paid when the home was sold. 

If sellers need help finding their SEV, those numbers are usually available from the title agent or the local municipality where the property is located.   

If the requirements are met, all that the seller needs to do is to fill out the refund application:  http://www.michigan.gov/documents/2796f7_2601_7.pdf and submit it to the Michigan Department of Treasury.  Remember to include the required documentation as shown on the form. 

If you have any questions regarding this possible tax refund, please contact Kimberly Large at 616-632-8024.