Do You Qualify for a Refund?
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Some recent home sellers may be eligible for a refund of the state transfer tax they paid at closing. This could mean a big refund for many folks because the Michigan state transfer tax is approximately 0.75% of the sales price.
That means if you sold a $275,000 home, you could have paid over $2,000 in transfer taxes at the time of your closing. The exemption itself was designed to protect sellers conducting sales in declining or depressed real estate markets, which was the case in West Michigan from 2006 until about 2012.
So, how do you know if you qualify for the refund? According to the application, there are two primary criteria to qualify for the refund.
- You sold your home when the property’s SEV (assessed value) was less than when you bought it.
- The home must have been your primary residence, not a rental property or second home.
If you meet these criteria, you may ask for a refund by filling out the application for the state of Michigan department of treasury.
You cannot get this refund for selling a second home or rental property.
Additionally, sellers must submit documented evidence supporting the request. Required documentation includes the following.
- Proof you paid the transfer tax.
- Proof of the date of purchase and the SEV in year of purchase.
- Proof of date of sale and the SEV in the year of sale.
- Proof of sale price.
The application must be filed within 4 years and 15 days of the home sale. There may be penalties if you submit a request for a refund but do not qualify. Read the application carefully, and check in with an accountant if you’re unsure about anything. If you have any questions, give us a call or send us an email. We would be happy to help you!