Real Estate Transfer Tax Valuation Affidavit in Michigan

The Michigan Real Estate Transfer Tax Valuation Affidavit, Form 2705, is the sworn statement you attach to a deed at recording when the deed itself does not state the full sale price. Both the State Real Estate Transfer Tax Act (MCL 207.525) and the County Real Estate Transfer Tax Act (MCL 207.504) require every recorded deed to disclose the total value of the property being transferred, “unless an affidavit is attached to the written instrument declaring the total value.”¹² Its purpose is simple: give the county Register of Deeds the numbers needed to collect the correct transfer tax when the deed keeps the price off the public record.

When You Have to File Form 2705

The trigger is the deed. If the deed states the full purchase price on its face, no affidavit is needed. If the deed uses nominal consideration (a common example is “$1.00 and other good and valuable consideration”), you attach Form 2705 with the real figures. The affidavit still becomes part of the recording file, but the price no longer appears on the deed itself.

Two less obvious situations also require it. First, transfers of a controlling interest in an entity that primarily holds real estate: if you acquire more than 80% of a corporation, LLC, or partnership whose real property makes up 90% or more of the entity’s fair market value, Form 2705 is required even though no traditional deed changes hands.³ Second, when a sale bundles real property with personal property such as furniture, equipment, or fixtures, the transfer tax applies only to the real property portion, and you must break the values out separately either on the deed or in the affidavit.¹

If the deed doesn’t state the price and no affidavit is attached, the Register of Deeds will reject the recording. County recording guidelines put it plainly: “Total value of real property must be stated on the face of the document or a real estate affidavit must be attached.”⁴

Not the Same as the Property Transfer Affidavit

This is where buyers and sellers most often go wrong. Michigan uses two separate affidavits, and they go to different offices for different purposes.

Form 2705, the Valuation Affidavit, goes to the county Register of Deeds at the time of recording. It exists to calculate and collect the one-time transfer tax under MCL 207.504 and MCL 207.525.
Form 2766, the Property Transfer Affidavit, goes to the local city or township assessor within 45 days of the transfer. It notifies the assessor of the ownership change so property tax records can be updated.⁵

You almost certainly need both. Filing Form 2705 does not satisfy the Form 2766 obligation, and vice versa.

What Form 2705 Asks For

The affidavit collects the information the Register of Deeds needs to verify the transfer tax due:³

The county, city, or township where the property is located.
Full names and mailing addresses of the seller and buyer.
The type and date of the instrument (deed, land contract, or controlling-interest transfer).
A financial breakdown: cash paid, debt assumed or relieved, mortgage or land contract amount, and total consideration.
Current market value, if the consideration paid is less than fair market value.
The full legal description of the real estate.
The county tax amount, state tax amount, and total revenue stamps.

The seller (or an authorized representative) signs the form, and it must be notarized. It is a sworn statement, so a false value is not just a tax exposure but a credibility problem if the transaction is later audited or litigated.

What Value to Report

For an ordinary arm’s-length sale, the number is what the buyer actually paid. Total consideration includes cash, assumed debt, mortgages, and anything else of value exchanged for the property.³

Transfers between family members, business partners, or other related parties at below-market prices need extra attention. Form 2705 specifically asks for the current market value whenever consideration is less than fair market value. An independent appraisal from a certified professional is the strongest support for the number you report. The previous year’s assessed value is a common shortcut but not always reliable, since Michigan assessors don’t always keep pace with rapid market shifts. Michigan’s State Equalized Value, intended to represent 50% of true cash value, is a useful reference point. Reporting a value well below the current SEV can prompt questions from the county or the Department of Treasury.

When a single deed transfers property in more than one county, the sale price must be allocated among the counties and the transfer tax paid separately to each.⁶ In a property exchange where two deeds swap ownership, each deed is taxed on the actual value of the property it conveys, so both sides of the trade generate transfer tax.

How the Tax Is Calculated

Transfer taxes are figured per $500 of property value, rounded up to the nearest $500. A sale at $250,100 is taxed on $250,500.

State transfer tax: $3.75 per $500 of value, or $7.50 per $1,000.¹
County transfer tax: $0.55 per $500 of value ($1.10 per $1,000) in counties with fewer than 2 million residents. Counties with populations of 2 million or more may charge up to $0.75 per $500.²

On a $300,000 sale in a typical Michigan county, the combined transfer tax comes to $2,580. The seller is legally liable for the state portion, though the purchase contract can allocate the cost differently between the parties.⁷ The tax is due when the deed is presented for recording, not later.

Common Exemptions

Many transfers owe no tax at all. MCL 207.526 lists dozens of state-act exemptions, and MCL 207.505 sets out a parallel list for the county tax. Some of the most frequently used:⁸

Transfers where total consideration is less than $100.
A deed given as security for a debt, or the assignment or discharge of that security interest.
Conveyances from a parent to a child, stepchild, adopted child, or grandchild; and spouses creating or disjoining a tenancy by the entireties.
Deeds where the grantor is the federal government, the state, or a municipality.
Deeds given in foreclosure of a mortgage or in lieu of foreclosure. This exemption does not carry over to a later resale.
Transfers ordered by a court, unless the court specifies monetary consideration.
Quitclaim deeds that correct a title flaw or straighten boundary lines without monetary consideration.

Claiming an exemption does not mean skipping paperwork. The Register of Deeds still needs to see that an exemption applies before recording. Your assessor may also request documentation to verify a claimed exemption, and failure to respond within 30 days to certain family-transfer inquiries can carry a $200 fine.⁵

Filing with the Register of Deeds

You submit Form 2705 to the county Register of Deeds along with the deed at recording. There is no separate filing fee for the affidavit itself; you pay the transfer taxes and the standard recording fee, which in Michigan is typically $30 per document regardless of page count.⁹ Most counties accept counter filings, and many process electronic submissions through title company software.

You can download the form from the Michigan Department of Treasury’s tax form search page.¹⁰ Title companies and closing attorneys typically prepare it as part of the transaction, so most buyers and sellers never fill it out themselves.

Don’t Miss the 45-Day Property Transfer Affidavit

After the deed is recorded, the new owner has a separate obligation: file the Property Transfer Affidavit (Form 2766) with the local city or township assessor within 45 days of the transfer. It’s required for any change in ownership, even when no deed is recorded, and it asks for the parties, date of transfer, actual consideration, and the property’s parcel identification number or legal description.⁵ Missing the 45-day window doesn’t affect your ownership, but it can create real problems when your tax bill doesn’t reflect the correct ownership or when you later try to claim an exemption.

1
Michigan Legislature. Michigan Compiled Laws 207-525
2
Michigan Legislature. Michigan Compiled Laws 207-504
3
Michigan Department of Treasury. Form 2705 Real Estate Transfer Tax Valuation Affidavit
4
Berrien County. Recording Requirements
5
Michigan Department of Treasury. Form 2766 Property Transfer Affidavit
6
Lenawee County, MI. Michigan Real Estate Transfer Tax
7
Michigan Department of Treasury. State Real Estate Transfer Tax FAQ
8
Michigan Legislature. Michigan Compiled Laws 207-526
9
Monroe County, MI. Schedule of Fees for Recording and Filing
10
Michigan Department of Treasury. Tax Form Search