New SRETT Rule in Michigan for State Real Estate Transfer Tax
If you have sold your principle residence in Michigan in the last four years, you may be eligible for a significant tax refund from the State. This past July, the Michigan Supreme Court released a detailed opinion that would allow many more Michigan homeowners, whose tax assessed value at the time of sale was less than the year the house was purchased, to claim an exemption from the State Real Estate Transfer Tax Act assessment of $7.50 for every $1,000 in value that was sold.
The following three conditions must be met at the time of sale in order to be eligible:
- The property must be claimed as the seller’s principal residence
- The tax assessed value of the property (or, state equalized value “SEV”) must be lower in the year of the sale than the year in which the property was purchased.
- The property was sold for a price in which a willing buyer and a willing seller would arrive through arm’s length transactions.
Transfer tax refunds can be applied for up to four years and fifteen days from the date of sale, according to the Michigan Department of Treasure Form 2796 (Application for State Real Estate Transfer Tax (SRETT) Refund).
The SRETT Refund could be a potentially large payoff, so it is best not to ignore it. If you believe you are eligible for this exemption and are in the process of selling your home, make sure to do your research on what specific language needs to be placed in the deed to avoid the transfer tax. If you recently sold your home in the last four years, let our team of professionals help you see if you are eligible for a refund.