Michigan Real Estate Transfer Taxes: An In-Depth Guide (2024 Update)

Jon Stubbs's Photo
By Jon Stubbs Updated March 14, 2024

SHARE

Who pays transfer taxes? | When are transfer taxes paid? | Methodology

Michigan's current transfer tax rate is $4.30 per $500. This includes $3.75 per $500 to the state plus $0.55 per $500 to the county.

For a house worth $239,770 — the median home price in the state — the transfer tax due will be $2,062. It doesn’t stop there, however, as cities within the state may charge an additional fee on top of the standard rate, which can cause your total dues to increase.

The specifics on who pays the transfer tax in Michigan are sometimes up for negotiation, but usually the seller is responsible.

Clever Real Estate can help you cut costs here — our concierge team will partner you with an experienced agent who can help you negotiate a good deal with your buyer on transfer taxes. Not to mention, you'll save big by paying only 1.5% in commission.

💰 Find an agent who can negotiate your transfer taxes

You can't change transfer tax rates. But, an experienced Clever Real Estate agent can help you win the negotiation battle so you aren't stuck paying all of the transfer taxes on your own.

When you choose Clever, you'll work with a full-service realtor with transfer tax expertise in your local market.

Clever's service is totally free, with zero obligation — you can walk away at any time.

Who pays transfer taxes in Michigan: The buyer or the seller?

Unless otherwise agreed upon, transfer taxes are customarily paid by the seller of the home. In certain circumstances, there may be an agreement that the buyer will pay the tax instead of the seller, but this needs to be negotiated in the purchase agreement.

Under normal circumstances, the seller will be required to pay a portion of the sales price to both the county the home was sold in and to the state of Michigan.

How Much Are Transfer Taxes in Michigan?

The state transfer tax rate in Michigan is $3.75 for every $500 of property value or 0.75% of the transferred property's value.

In addition to the state tax, each individual county levies an additional transfer tax of $0.55 per $500.

In counties with over two million residents, the current tax law allows the rate to increase to $0.75 per $500 (0.15%). However, even the largest county in Michigan is currently below that threshold, so the higher tax rate is not currently in use.

In total, sellers (unless otherwise agreed upon) in Michigan pay 0.86% in transfer taxes.

Can You Deduct Transfer Taxes?

Unfortunately, unlike property taxes, the IRS does not allow you to deduct transfer taxes on your annual tax return. However, they can help you with capital gains taxes.

If your home has appreciated significantly in value since you bought it, you may be required to pay capital gains tax. Currently, the IRS allows you to exclude $250,000 of capital gains if you're single and $500,000 if you're married.

If you exceed these cutoffs, you can reduce your tax exposure by adding the transfer tax onto your cost basis, the price you paid for your home when you bought it. Let's look at an example:

Say you bought your home for $200,000 — the cost basis — and you're currently selling it for $500,000. You will have made $300,000 in capital gains, so you will need to pay capital gains tax on $50,000. However, if you paid 0.86% in transfer taxes upon closing ($4,300), you can add that onto the cost basis to bring it up to $204,300. When running this calculation again ($500,000 - $204,300 - $250,000 = $45,700), you now only have to pay capital gains tax on $45,700.

When do you pay transfer taxes in Michigan?

Transfer taxes are paid at closing, and in most cases are paid by the seller.

Other Considerations

Generally, transfer taxes are paid upon closing. The amounts required will be noted on the HUD-1 that both parties sign during the closing procedure.

Real estate transactions can be confusing and intimidating events filled with tons of small print and legalese. Luckily, a qualified real estate agent can help walk you through the red tape and make the entire process a much simpler and pleasant experience. Whether you're buying or selling, finding a top-notch real estate is one of the most important pieces of the puzzle.

We’ll partner you with a local real estate agent who knows how to deal with the state’s tax and helps negotiate a deal in your favor. What’s more, our agents charge only a 1.5% listing fee compared to the state average of 2.96%! The money you'll save can more than offset the cost of the transfer taxes.

» SAVE: Learn more about how a Clever agent can help you navigate California transfer taxes

Methodology

  • Transfer tax amounts are based on government website information as of February 2024.
  • We gathered our listing commission rate data from a December 2023 survey of 630 of our partner agents.
  • Home values, list prices, and sale prices are based on Zillow data as of March 2024.

Related Articles

Authors & Editorial History

Our experts continually research, evaluate, and monitor real estate companies and industry trends. We update our articles when new information becomes available.

Better real estate agents at a better rate

Enter your zip code to see if Clever has a partner agent in your area
If you don't love your Clever partner agent, you can request to meet with another, or shake hands and go a different direction. We offer this because we're confident you're going to love working with a Clever Partner Agent.