Obtaining a refund of transfer tax paid on the sale of a home that has lost value

Michigan home sellers who experience a decline in their home’s value since purchase can now claim exemption from state transfer tax, thanks to recent legislation and a Michigan Supreme Court decision.

This exemption, designated as (u), applies if the State Equalized Value (SEV) at the time of sale equals or is less than the SEV at the time of purchase, provided the sale is at fair market value. Sellers who paid the transfer tax despite qualifying for this exemption can seek a refund, typically the seller, by filing a refund request with the Michigan Department of Treasury. Required documentation includes proof of tax payment, settlement statements, SEV records from purchase and sale years, and sale price verification.