What to do about property taxes?

With lower property values due to our struggling economy, many homeowners have been able to take advantage of an exemption contained in the Michigan Transfer Tax Act. If your seller meets the criteria, they would be exempt from paying the state transfer tax. Following are the criteria:

The property must have been occupied as a principle residence – classified as homestead property.
The property’s SEV for the calendar year in which the transfer is made must be less than or equal to the property’s SEV for the calendar year in which the seller acquired the property.
The property cannot be transferred for consideration exceeding its “true cash value” for the year of the transfer.

For example:
If the SEV of the homestead principle residence when acquired in 2005 is $100,000 and the current SEV on the property is $90,000, then the first two criteria have been met. To establish the “true cash value” of the property, you must double the current SEV at the time of transfer. In this scenario, the true cash value would be $180,000. If the property sold for $170,000, then the 3rd criteria has been met of Exemption “u” as designated by the Michigan Transfer Tax Act.

Please call your local Real Estate One Sales Associate if you have more questions or to chat about this topic.