What are Transfer Taxes and Why is the Transfer Tax Valuation Affidavit Helpful?

Alicia Schaub

The State of Michigan imposes a tax on all conveyances of real property when recorded with the Register of Deeds. Pursuant to Michigan Statute, the seller is liable for the tax, specifically “the person who is the seller or grantor of the property is liable for the tax imposed under the State Real Estate Transfer Tax Act.” MCL 207.523(2)

Payment of the tax is paid to the County Treasurer in which the property is located.

There are also County Transfer Taxes that apply in addition to the State Transfer Tax. Each impose a different rate.

The tax rate for the State Transfer Tax is $3.75 per $500

The tax rate for the County Transfer Tax is $0.55 per $500

For example, if you sell a home for $300,000.00, you would owe the following in Transfer Taxes:

State Transfer Tax = $2,250.00

County Transfer Tax = $330.00

At closing with Access Title Agency, the Seller will sign a Transfer Tax Valuation Affidavit. Pursuant to the statute, the instrument of conveyance (for example a Warranty Deed), must state on its face the total value of real property. This means that on the deed, you are required by law to state the consideration for the sale.

However, you can choose to remove the consideration from the face of the deed ONLY IF you file a Transfer Tax Valuation Affidavit with the County.

In general, this Affidavit is not recorded and may not be disclosed to any other person. This Affidavit does not become public record and is only used for assessment purposes by the County.

Why this may be helpful to you?

When recording the warranty deed, it becomes a matter of public record.

Filing a Transfer Tax Valuation Affidavit is a way to omit the sale price from the deed.

Both the State and County Real Estate Transfer Tax Act has certain exemptions in which a seller or grantor does not have to pay the transfer taxes.

If you would like to review these exemptions, they can be found here:

State Real Estate Transfer Tax Act: http://legislature.mi.gov/doc.aspx?mcl-207-526

Real Estate Transfer Tax Ace (County): http://legislature.mi.gov/doc.aspx?mcl-207-505

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