Michigan REALTORS® Promote Fairness in Transfer Tax

Real estate transfer taxes make buying and selling a home more expensive. Michigan REALTORS® are working to change a part of their state’s transfer tax law that is unfair to buyers and sellers.

Michigan imposes a state tax of 0.75% on the sale of real property and allows counties to collect a tax of 0.11%. Michigan REALTORS® have been a force behind proposed legislation, HB 4173, that would reform the transfer tax.

The bill, sponsored by Rep. Dave Maturen (R-Portage), relates to situations in which transfer taxes have been erroneously paid to the state or a county and a refund is requested. HB 4173 would provide that any party who wrongfully paid the transfer tax could seek a refund.

Although the transfer tax is to be paid by the seller, sales contracts frequently shift the burden of paying the tax to the buyer. If the transfer tax was paid in error (for example, the sale was supposed to be exempt from the tax), a refund may be sought — but only by the seller. This makes it difficult, and sometimes impossible, for a buyer to obtain a refund.

Brad Ward, vice president of public policy for Michigan REALTORS®, says the goal of HB 4173 is to restore the integrity and fairness of the real estate transfer tax. Making sure a refund goes to the person who erroneously paid the tax is an important step in that direction.