Every time real estate in Michigan is sold, a transfer tax is collected before the deed can be recorded. Most buyers and sellers encounter this cost at the closing table, folded into a line on the settlement statement, without fully understanding how it is calculated. This guide explains the math behind the calculator, step by step, so you know exactly what you owe — and when you might owe nothing at all.
What Is the Michigan Real Estate Transfer Tax?
Michigan actually has two separate transfer taxes collected at the same time: a state tax and a county tax. Both are paid by the seller (the grantor) at the time the deed is recorded with the county Register of Deeds.[1] Payment is due within 15 days of the deed being delivered to the buyer.[2]
The state tax is authorized by 1993 PA 330 (Michigan Compiled Laws §207.521–207.537), which took effect January 1, 1995.[1] The county tax is authorized by 1966 PA 134 (MCL §207.501–207.513), which took effect January 1, 1968.[3]
| Tax | Rate per $500 | Equals per $1,000 | Legal authority |
|---|---|---|---|
| State Transfer Tax | $3.75 | $7.50 | MCL 207.525 (1993 PA 330)[1] |
| County Transfer Tax | $0.55 | $1.10 | MCL 207.504 (1966 PA 134)[3] |
| Combined total | $4.30 | $8.60 | — |
All 83 Michigan counties use the same $0.55 rate. State law allows counties with populations over two million to charge up to $0.75, but no Michigan county currently qualifies.[3]
Step 1 — Calculate Total Consideration
The tax is not based on the listing price or the appraised value. It is based on total consideration: every dollar of value the seller receives.[4] That means cash paid plus any existing mortgage or loan the buyer agrees to take over (called “assumed debt”).
If you sell a home for $400,000 cash and the buyer also takes over your $50,000 mortgage, the total consideration is $450,000 — and that is the figure used for the tax calculation.
Example A
All-cash sale — $320,000
Cash price$320,000
Assumed mortgage$0
Total consideration$320,000
Example B
Sale with assumed mortgage — $500,000 cash + $100,000 assumed
Cash price$500,000
Assumed mortgage$100,000
Total consideration$600,000
Step 2 — Check the Under-$100 Threshold
If total consideration is less than $100, both taxes are automatically zero — no calculation needed.[5] This exemption exists in both the state act (MCL 207.526(a)) and the county act (MCL 207.505(a)).
Note: at exactly $100.00, the exemption does not apply. The tax kicks in at $100 and above.
Example A — Exempt
Nominal transfer for $75
Total consideration$75.00
Under $100?Yes
No tax due — exempt under MCL 207.526(a)
Example B — Taxable
Transfer for exactly $100
Total consideration$100.00
Under $100?No — tax applies
Proceed to calculation→
Step 3 — Determine Whether an Exemption Applies
Beyond the under-$100 rule, Michigan law lists many situations where transfer taxes are reduced or eliminated entirely. Some exemptions zero out both taxes; others only eliminate the state tax while the county tax still applies.[5][6]
- Transfer between spouses to create or sever tenancy by entireties Both exempt — MCL 207.526(i)
- Divorce decree / court-ordered division of property Both exempt — MCL 207.526(i)
- Parent or stepparent to child (or grandparent to grandchild) State only exempt — MCL 207.526(j)
- Transfer to or from a government entity Both exempt — MCL 207.526(c)
- Foreclosure deed conveyed to the lender State only exempt — MCL 207.526(v)
- Corporate reorganization with no change in ultimate ownership Both exempt — MCL 207.526(p)
- Boundary line correction with no money changing hands Both exempt — MCL 207.526(d)
- Transfer to a bankruptcy trustee or receiver Both exempt — MCL 207.526(o)
- Transfer to or from a qualifying religious or charitable organization Both exempt — MCL 207.526(s)
The “state only” cases are important to understand. When a parent gives property to a child, for example, Michigan’s state law grants a full exemption — but the 1966 county act has no matching provision, so the county tax is still owed in full.
Example A — Fully Exempt
Husband conveys family home to wife — $280,000 value
Exemption typeSpousal transfer
State taxExempt
County taxExempt
$0.00 total — MCL 207.526(i)
Example B — Partially Exempt
Mother gifts property to adult son — $150,000 value
Exemption typeParent to child
State taxExempt — MCL 207.526(j)
County taxStill applies (no county exemption)
Proceed to county calculation only→
Step 4 — Count the $500 Blocks (The Rounding Rule)
Michigan’s transfer tax is calculated in increments of $500, not as a straight percentage. You divide the total consideration by 500 and then always round up to the next whole number, even if the remainder is just one cent.[4] In mathematics this is called a “ceiling” function.
This rounding rule means a $500,001 property is treated as if it were $501,000 for tax purposes. Every fraction of a $500 block is charged as a full block.
Example A
Clean number — $250,000
$250,000 ÷ 500500.000
Round up to whole number500
Number of $500 blocks500
Example B
Odd amount — $1,234,567.89
$1,234,567.89 ÷ 5002,469.136…
Round up to whole number2,470
Number of $500 blocks2,470
Step 5 — Calculate the State Transfer Tax
Multiply the number of $500 blocks by the state rate of $3.75, as set by MCL 207.525.[1] If the state exemption flag from Step 3 is active, this amount is $0.
Example A
$250,000 sale — 500 blocks
500 blocks × $3.75$1,875.00
State transfer tax$1,875.00
Example B
$1,234,567.89 sale — 2,470 blocks
2,470 blocks × $3.75$9,262.50
State transfer tax$9,262.50
Step 6 — Calculate the County Transfer Tax
Using the exact same number of $500 blocks from Step 4, multiply by the county rate of $0.55, as set by MCL 207.504.[3] If the county exemption flag is active, this is $0. Because all 83 Michigan counties currently use the same $0.55 rate, no county selection is needed in the calculation.[3]
Example A
$250,000 sale — 500 blocks
500 blocks × $0.55$275.00
County transfer tax$275.00
Example B
Parent-to-child gift — $150,000 — State exempt, county not
$150,000 ÷ 500 = 300 blocks300
State tax (exempt)$0.00
300 blocks × $0.55$165.00
County transfer tax$165.00
Step 7 — Add State and County Taxes Together
The final step is straightforward: add the state tax and the county tax to reach the total transfer tax due. This is the amount the seller must pay when the deed is recorded — no later than 15 days after the deed is delivered to the buyer.[2]
Example A — Standard Home Sale
$250,000 sale, no exemptions
State tax$1,875.00
County tax$275.00
Total transfer tax due$2,150.00
Example B — High-Value Sale with Assumed Mortgage
$500,000 cash + $100,000 assumed debt = $600,000 total
Blocks: $600,000 ÷ 500 = 1,2001,200 blocks
State tax: 1,200 × $3.75$4,500.00
County tax: 1,200 × $0.55$660.00
Total transfer tax due$5,160.00
Filing Requirements
Michigan requires that a Real Estate Transfer Valuation Affidavit (Michigan Department of Treasury Form L-4260, also called Form 2705) accompany the deed at recording.[7] This form declares the sale price and computes the tax. It must list all sellers (grantors) by name. If a transfer involves property in more than one county, the total consideration must be allocated parcel-by-parcel, and the appropriate tax is paid separately to each county’s Register of Deeds.[8]
If you believe your transfer qualifies for an exemption, state the legal basis on the deed or affidavit. Either the seller or the buyer may later apply for a refund from the Michigan Department of Treasury if an exemption should have applied but was not claimed at the time of recording.[2]
Quick-Reference Summary
| Situation | State tax | County tax |
|---|---|---|
| Standard sale ≥ $100 | 3.75 × blocks | 0.55 × blocks |
| Sale under $100 | $0 | $0 |
| Spousal / divorce transfer | $0 | $0 |
| Parent → child gift | $0 | 0.55 × blocks |
| Foreclosure deed to lender | $0 | 0.55 × blocks |
| Government entity transfer | $0 | $0 |
References & Legal Authorities
[1]Michigan Legislature. State Real Estate Transfer Tax Act, 1993 PA 330. Michigan Compiled Laws §207.521–207.537, specifically §207.525 (rate of $3.75 per $500) and §207.526 (exemptions). Effective January 1, 1995. legislature.mi.gov
[2]MCL 207.525(3). Seller (grantor) liability for payment; 15-day deadline from delivery of deed; refund procedure for exempt transfers. In: 1993 PA 330.
[3]Michigan Legislature. County Real Estate Transfer Tax Act, 1966 PA 134. Michigan Compiled Laws §207.501–207.513, specifically §207.504 (rate of $0.55 per $500 for counties under 2,000,000 population). Effective January 1, 1968. All 83 Michigan counties currently use the $0.55 rate. legislature.mi.gov
[4]MCL 207.523 / MCL 207.501 — definition of “total consideration” (cash + assumed debt) as the tax base. Rounding rule (any fraction of $500 = full $500 block) derived from the stamp-based calculation structure of both Acts. Michigan Department of Treasury Transfer Tax FAQs confirm this methodology.
[5]MCL 207.526(a) — state exemption for consideration under $100. MCL 207.505(a) — identical county exemption. Both Acts (1993 PA 330 and 1966 PA 134).
[6]MCL 207.526(i) — spousal / tenancy-by-entireties exemption (state); MCL 207.505(h) — county equivalent. MCL 207.526(j) — parent-to-child and grandparent-to-grandchild exemption (state only; no county counterpart). MCL 207.526(v) — foreclosure deed to lender exemption (state only). MCL 207.526(p) — corporate reorganization (both). MCL 207.526(o) — bankruptcy trustee (both). MCL 207.526(c) / 207.505(c) — government entity (both). MCL 207.526(s) — religious/charitable (state).
[7]Michigan Department of Treasury. Real Estate Transfer Tax Valuation Affidavit (Form L-4260 / Form 2705). Required when deed does not state consideration or when a controlling interest in a real-estate entity is transferred. michigan.gov/taxes
[8]Michigan Register of Deeds guidance on multi-county parcels: consideration must be allocated by parcel and tax paid separately to each county. Derived from MCL 207.501 et seq. and county ROD administrative practice.
This article is for informational purposes only and does not constitute legal or tax advice. Consult a Michigan real estate attorney or the Michigan Department of Treasury for guidance on your specific transaction.