26
JAN
2016

Home Sellers Maybe Eligible for a New Tax Refund

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For home sellers with declining home values there is good news!

hypothecary-creditIf you sold your home and your state equalized value (SEV) at the time of the sale was lower or equal to the SEV when you purchased it, then you could get a substantial amount back from the State of Michigan!

Governor Rick Snyder signed a bill  on December 15, 2015 that immediately went into effect to help home owners with the State Real Estate Transfer Tax (SRETT) Refund.

The Michigan Department of Treasury allows sellers to request refunds of the state transfer tax going back 4 years and 15 days of the date of the transfer.

 

There are a few conditions that must be met to qualify:

  1. The SEV must be lower in the year of the sale than the year in which the property was purchsed.
  2. The property must have been claimed as your principal residence.
  3. The sale price must be fair market value, or the price at which a willing buyer and a willing seller would arrive through an arm’s length negotiation.

If you are eligible for the exemption and you are in the process of selling your home now you may be able to avoid the state transfer tax but discuss this with your real estate agent and title company to make sure this is handled properly.

For those you are seeking a refund, the application can be found online (https://www.michigan.gov/documents/2796f7_2601_7.pdf). Under Part 2 print the letter “U” for the basis of the claim – refer to page 2 of the form. You must also provide the following documentation which you can obtain from your real estate agent or title office:

  • Copy of your settlement statement (HUD-1)
  • Copy of your RECORDED DEED containing the Tax Stamp
Example

Your purchase a primary residence in 2012. At that time the SEV was $120,000.

In 2015 you SOLD this home for $220,000 and at the time of the sale the SEV was $100,000. Your are eligible to request the refund.

The transfer tax is $7.50 for every $1000 in value based on the sale price or $1600 in this example.

This information is provided as a guide and you may want to consult an attorney or tax consultant about your specific situation.

About the Author
Leslee is an associate broker of United Country Michigan Lifestyle Properties based in Richland Michigan, just outside of Kalamazoo. Learn more about Leslee at http://www.MichiganCountryHomes.com

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