Michigan Transfer Tax: Rates, Exemptions, and Who Pays

The Michigan transfer tax is $8.60 for every $1,000 of a property’s sale price: $3.75 per $500 goes to the state and $0.55 per $500 goes to the county.¹² The seller typically pays it at closing, and the County Register of Deeds will not record the new deed until the tax is settled. A handful of exemptions can wipe out part or all of the bill, and the state portion often disappears on the sale of a long-held primary home.

Rate and How To Calculate It

The tax applies to the total consideration, which in a normal sale is the purchase price. When there is no arm’s-length price, fair market value is used instead. This is the full sale price, not the State Equalized Value on your property tax notice.

The math rounds up to the next $500 increment. On a $300,000 sale:

State: 600 increments × $3.75 = $2,250
County: 600 increments × $0.55 = $330
Total: $2,580

A $300,250 sale rounds up to 601 increments for both parts. On most Michigan closings, this line is one of the larger seller costs on the settlement statement.

Who Pays and When

By default the seller pays both the state and county portions. The Register of Deeds collects the money at the moment the deed is presented for recording, so if the tax is not paid, the deed does not record and title does not transfer on the public record. Title companies and closing attorneys handle this as part of the standard closing package.

Buyer and seller can agree to a different split in the purchase agreement. A buyer might absorb the tax as part of a stronger offer, or the parties might share it. The Register of Deeds does not care who actually funded the payment, only that it clears with the deed.

Exemptions That Eliminate the Tax

Michigan law lists a wide set of transfers that owe no state transfer tax, and most of the same categories cover the county tax as well.³ The ones people run into most often:

Family Transfers

Deeds between a parent and a child, stepchild, or adopted child are exempt, as are transfers from a grandparent to a grandchild, step-grandchild, or adopted grandchild. Adding or removing a spouse from the title through a conveyance that creates or ends a tenancy by the entireties is also exempt.³

Low-Consideration and Corrective Deeds

Any deed where the total consideration is under $100 is exempt. Court-ordered transfers with no monetary consideration owe no tax. Deeds that fix a title defect, confirm ownership already vested in the grantee, or adjust a boundary line without money changing hands also qualify.³

Security, Entity, and Lease Transfers

A mortgage or other deed given as security for a loan is not a taxable transfer. Deeds between a business entity and its owners, members, or partners can qualify when no real change in beneficial ownership takes place. Leases, including oil and gas leases, are exempt, and a land contract does not trigger the tax until legal title actually passes to the buyer after full payment.³

Government Transfers

Deeds from federal, state, or local government entities acting in their official capacity are exempt, along with deeds given in foreclosure or in lieu of foreclosure on government-guaranteed loans.³

Every claimed exemption has to be documented, either on the face of the deed or through an accompanying affidavit. The Register of Deeds reviews the paperwork before accepting the document, so a deed that shows up without support for its exemption will not record.

Principal Residence Exemption

Sellers of a primary home may qualify for an exemption from the state portion of the transfer tax. The exemption applies when the property’s SEV at the time of sale is equal to or less than the SEV on the first tax day after the seller acquired the property or received a certificate of occupancy, whichever came later, and the sale is an arm’s-length transaction.³

This one matters for owners who sold in a flat or declining market: if the assessed value never rose above where it started, the state tax can drop to zero. The county tax still applies. If the state tax was paid at closing before anyone realized the exemption fit, the seller (or a buyer who paid it) can request a refund from the Michigan Department of Treasury, subject to the standard statute of limitations for tax refund claims.³

Do Not Confuse This With the Property Transfer Affidavit

The transfer tax and the Property Transfer Affidavit are separate obligations. The affidavit (Form L-4260) is filed by the buyer with the local assessor within 45 days of the ownership change so the property can be reassessed. Missing the deadline triggers daily penalties:⁴

Principal residence: $5 per day, up to $200
Other residential or non-commercial property: $5 per day, up to $4,000
Commercial or industrial sold for $100 million or less: $20 per day, up to $1,000
Commercial or industrial sold for more than $100 million: a flat $20,000

Title companies usually file the affidavit as part of the closing, but the legal duty falls on the buyer. If you closed without one and are not sure it went in, call the local assessor.

Federal Tax Treatment

The transfer tax is not deductible as a real estate tax on a federal return.⁵ It is not wasted from a tax standpoint, though. For a seller, it counts as a selling expense that reduces the amount realized on the sale, which in turn reduces any taxable gain. For a buyer who paid the tax, the amount adds to the cost basis, which lowers taxable gain on a future sale.⁶

1
Michigan Legislature. Michigan Compiled Laws MCL 207.525
2
Michigan Legislature. Michigan Compiled Laws MCL 207.504
3
Michigan Legislature. Michigan Compiled Laws MCL 207.526
4
Michigan Legislature. Michigan Compiled Laws MCL 211.27b
5
Internal Revenue Service. Publication 530, Tax Information for Homeowners
6
Internal Revenue Service. Publication 523 (2025), Selling Your Home