Mortgage glossary · Michigan
Who pays the Michigan transfer tax, and how much is it?
On this page: How it is calculatedExampleExemptionsFAQ
How the transfer tax is calculated
The price is counted in $500 steps, and any part of a step counts as a whole one. Two taxes apply, one for the state and one for the county.
State tax
$3.75 for every $500 of the price
Set by the State Real Estate Transfer Tax Act.
County tax
$0.55 for every $500 of the price
The rate the county act sets for any county with fewer than two million residents.
Together
$4.30 for every $500, or $8.60 per $1,000
Paid to the county treasurer when the deed is recorded, usually through the title company at closing.
An example: what it comes to at three prices
Divide the price by $500, round any remainder up to the next whole step, then multiply by each rate. On a $300,000 sale that is 600 steps.
The seller usually sees this as a line on their settlement statement, beside the recording fees. Here is what it comes to at three prices.
| Sale price | State tax | County tax | Total |
|---|---|---|---|
| $250,000 | $1,875 | $275 | $2,150 |
| $300,000 | $2,250 | $330 | $2,580 |
| $400,000 | $3,000 | $440 | $3,440 |
A price that is not a round multiple of $500 rounds up to the next step: a $300,100 sale counts as 601 steps.
Who pays it
Michigan law places the tax on the seller, and in most sales the seller pays it from the proceeds at closing. A purchase agreement can shift it, and in some negotiations it does, so read the clause rather than assuming. On a Loan Estimate and a Closing Disclosure it appears in the taxes and government fees section.
For a buyer, the transfer tax is usually not a cost at all. What matters on the buyer's side is the uncapping of taxable value the year after the purchase, which changes the monthly payment for as long as you own the home.
Common exemptions
The full list is in section 6 of the state act. These are the ones that come up most in home sales.
A principal residence that did not gain value
The state portion is not owed when the home was the seller’s principal residence, its state equalized value is no higher than when the seller acquired it, and it sold at an arm’s-length price. A seller who already paid it can claim a refund.
Refinancing
A mortgage, or any document given as security for a loan, is exempt, so a refinance owes no transfer tax. It does still carry recording fees.
Spouses and family
Conveyances between spouses creating or ending a tenancy by the entireties, and conveyances to a child, stepchild, grandchild or adopted child, are among the listed exemptions.
Land contracts
A land contract under which title passes only at payoff is exempt when it is signed. The tax is paid when the seller delivers the deed at the end.
Transfer tax vs. uncapping
Transfer tax
A one-time charge at the sale, based on the price, usually paid by the seller and gone once the deed is recorded.
Uncapping
A lasting change to the buyer’s property tax. The year after the sale, taxable value resets to the state equalized value, and the bill follows it for as long as you own the home.
Questions people ask about the transfer tax
Does the buyer pay transfer tax in Michigan?
Usually not. The law places it on the seller and most sales follow that, but the purchase agreement decides, so read it.
Is transfer tax due when I refinance?
No. A mortgage given as security for a loan is exempt, so a refinance carries no transfer tax. It does carry recording fees.
When is it paid?
At closing in most sales. The title company collects it and pays the county treasurer when the deed is recorded.
Does a land contract trigger the tax?
Not when it is signed, if the deed passes only at payoff. The tax is paid when the seller delivers the deed at the end of the contract.
How does a seller claim the principal residence refund?
By applying to the Michigan Department of Treasury with proof the tax was paid and that the sale met the conditions. Only the party that paid the tax can claim it, so keep the closing statement.
Keep going
Related tools and guides
Buy Before You Sell
When you need to buy the next home and sell this one, and the order matters.
See the planThe finances of selling
What it costs to sell a home and what you actually keep.
Read the guideTaxable value and uncapping
The tax change that matters to the buyer, and how to plan the payment on it.
Read the guideSources
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