You may be entitled to a refund of the State Real Estate Transfer Tax (SRETT) you paid on the sale of a principal residence in an arms-length transaction or, if you are now in the process of selling a principal residence, you may qualify for an exemption from the SRETT.
In July 2015, the Michigan Supreme Court issued an opinion holding that taxpayers who sold their principal residence in an arms-length transaction were entitled to refunds of the real estate tax paid on the sale of the residence where the state equalized value of the property at the time of the sale was less than or equal to the value at the time of the original purchase. Gardner v Department of Treasury, 498 Mich 1 (2015). The Michigan Legislature has recently codified the requirements set forth in Gardner. See, MCL 207.523(4). In addition, if you are now in the process of selling your principal residence, you may qualify for an exemption from the State Real Estate Transfer Tax pursuant to MCL 207.526(u).
In order to qualify for the refund (or exemption) you must demonstrate that (1) the property was the principal residence of the seller for which an exemption was claimed pursuant to MCL 211.7cc, (2) the property had a state equalized value (SEV) at the time of conveyance that was less than or equal to the SEV at the time the property was acquired, and (3) the property was sold for a price at which a willing buyer and a willing seller would arrive through arm’s length negotiation.
A request for a refund of real estate transfer tax paid must generally be filed with the Michigan Department of Treasury within four years and 15 days from the date of sale or transfer of the property. However, the statute provides that sales that occurred on or after June 24, 2011 are included.
If you have questions about whether you might be entitled to claim a state transfer tax exemption on a pending sale or whether you might be entitled to a refund on a past sale, call the number below and ask to speak with one of our real estate attorneys.
Seglund Gabe Pawlak & Groth, PLC
At Seglund Gabe Pawlak & Groth, PLC, our real estate attorneys are qualified to represent both the buyers and the sellers in residential and commercial real estate transactions. They have experience in real estate finance and have represented the interests of both borrowers and lenders. Our attorneys also represent landlords and tenants in negotiating and drafting lease documents. Our attorneys can prepare and review all of the documents that are necessary for a real estate transaction to ensure that everything has been drafted properly to protect your interests. In addition, our attorneys are experienced in litigation involving all aspects of the purchase, sale or lease of real property, both at the trial and appellate levels.
Seglund Gabe Pawlak & Groth, PLC
28345 Beck Road, Suite 301
Wixom, MI 48393
Phone: (248) 869-0030
Fax: (248) 869-0039
***The information provided in this article is for informational purposes only and is not legal advice. If you have a question about whether you are entitled to an exemption from the State Real Estate Transfer Tax or a refund for a prior payment of the State Real Estate Transfer Tax, consult an attorney who is well-versed in this topic.