With all the talk of house prices rebounding after valuations tanked during the Great Recession, it may be easy to forget just how precipitously home values fell after their peak a decade ago.
Last January, the Detroit Free Press reported that home prices across Southeast Michigan have risen back to 2007 levels. However, for many homeowners, the prices they sold their homes for may still not be as great as what the purchase price was.
Because of that fact, in December 2015 Michigan Governor Rick Snyder signed into law legislation that people who sold their homes on or after June 24, 2011 may be entitled to a refund of the transfer tax that they paid to the State of Michigan — if the state equalized value (SEV) of the home at the time of sale was less than the SEV at the time of purchase. The legislation was in response to a Michigan Supreme Court ruling that expanded refund eligibility in these circumstances.
In other words, if you sold your home for less than what you purchased it for, and it was your principal residence, you likely are now eligible for a refund of the transfer tax you paid to the state.
Of course, there are some catches …
In order to claim the exemption, three conditions must be met at the time of sale:
- The property must be claimed as the seller’s principal residence.
- The tax-assessed value of the property (or, state equalized value “SEV”) must be lower in the year of the sale than the year in which the property was purchased.
- The property must have been sold for a price in which a willing buyer and a willing seller would arrive through arm’s length transactions.
And according to the Michigan Department of Treasury Form 2796 (Application for State Real Estate Transfer Tax [SRETT] Refund), transfer tax refunds can be applied for up to four years and 15 days from the date of sale.
The SRETT can be a significant amount of money, so it shouldn’t be ignored. As an example, if the sales price of your house was $200,000, you could be eligible for a $1,500 refund.
In early July of 2015, the Michigan Supreme Court issued an expansive opinion providing many more Michigan homeowners the right to claim an exemption from the SRETT assessment of $7.50 for every $1,000 in value that was sold.
While the exemption has been available to Michigan homeowners for a number of years, the Supreme Court’s opinion and the subsequent legislation greatly expanded who is eligible for it.
For more information on whether you may entitled to a refund of your transfer tax or other real estate matters, call Resnick Law at 248.642.5400 or click here.