Saline Real Estate and Homes for Sale

When you sell any Saline real estate, you owe a transfer tax (think of it like a sales tax on real estate).  With any tax, though, there are some exemptions to the State Transfer Tax for your Saline real estate.  (Original article written by Vance Shutes).  Let's look at this matter today.

When you sell any Saline real estate, you owe a transfer tax.  Unlike in retail situations (where the buyer pays the sales tax), the seller pays the transfer tax for real estate.

The amount of the transfer tax is approximately $4.30 for every $500 in value of the sale.  For example, if you sell your Saline home for $100,000, your transfer tax will be $4.30 x ($100,000 / $500) = $860.  The total tax is split between the state and the County.  The transfer tax took effect with the passage of Proposal A back in 1994 (where we capped the annual increase in our property taxes in exchange for paying the transfer tax when we finally do sell).

With any tax, though, there are some exemptions.  Michigan Commercial Law (MCL) 207.526 sets forth a number of exemptions from the requirement that the transferor (the seller) pay state transfer tax in connection with certain transfers of real property (real estate).  Subsection (t) was the subject of some confusion, with the result that many local treasurers were refusing to allow its application.  The issue was not important until the prolonged downturn in the real estate market.  In 2008, the Michigan Attorney General (AG) offered his opinion clarifying the exemption for the benefit of many sellers of principal residents (your primary home).

Subsection (t), as clarified by the AG, provides that the transfer tax is exempt if the following exist:

a) The state equalized value (SEV) of the property is equal to or less than the SEV on the date the property was purchased; and,

b) The amount paid for the property does not exceed its true cash value (as established by the local assessor) at the time of the sale.

So what does this mean, in "normal" language?  (NOTE:  I'm not an attorney, nor do I play one on TV.  I'm not offering a legal opinion here, just my own interpretation of the language.  Consult your own attorney in any legal matter.)  It may be easier to give an example:

If you bought your Saline home in 2004 for $200,000, your SEV may have been $100,000.  From 2004-2006, your SEV increased along with the overall market.  In 2007, your SEV began to decline in value to its present (2010 value of) $85,000.  When you sell your home this year, with an SEV which is lower than the SEV when you purchased your home, you meet criteria a) above.

In order to know the "true cash value" of your home, you'll need to visit your local assessor's office at the City or Township hall.  Be sure to call first, as many Township halls are not open every weekday.  Ask the assessor for a copy of the assessment card for your property.  Ask them also to point out the true cash value figure on the form, so you'll be able to find it again.

If you end up selling your home for less than the true cash value as shown on the assessor's card, you meet criteria b) above.

So, what should you do?

If you meet both of the criteria, it would be wise to consult with your attorney.  Ask them to verify that you meet the criteria, and ask their involvement with the Title Company handling the closing of the sale of your Saline real estate.  It could save you hundreds, if not thousands, of dollars in transfer tax!

If you have questions about your specific situation, or if you're considering buying or selling any Saline real estate, you owe it to yourself to take advantage of my experience in the Saline market.  I'd be happy to meet with you!  Just give me a call at (734) 476-2063, or send an e-mail, "Vance (at) SalineMichiganRealEstate (dot) com".

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