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Are You Entitled to a Real Estate Transfer Tax Refund?

Aug 4 | 2023  by

Are you a recent seller? Did you pay real estate transfer tax as part of the sale? Did you sell the home for less than what you paid for it? If so, there’s a chance you may be eligible for a refund on the real estate transfer tax you paid, often called a RETT Refund. Transfer tax is usually 0.75% of the sale price, which can be thousands of dollars depending on the sales price.

The Details

It is customary that sellers incur the payment of the real estate transfer tax in a sale. However, they may be able to get a refund of that amount. There is an exception under MCL 207.526(u) which allows for sellers, or buyers that paid the RETT, to apply for a refund of that transfer tax with the Michigan Department of Treasury if they qualify for it. MCL 207.526(u) states:

“Notwithstanding section 22 of 1941 PA 122, MCL 205.22, and section 3(4) of this act, if the seller or the buyer who has paid the tax on behalf of the seller believes that the property was eligible for an exemption under this subdivision at the time of transfer, the seller or the buyer who has paid the tax on behalf of the seller may request a refund from the department in a form and manner determined by the department.”

Additionally, on July 9, 2015, the Michigan Supreme Court issued a decision in Gardner v. Department of Treasury, 498 Mich 1, which outlined the requirements to obtain a RETT refund for sellers (and buyers who paid it), which led to the legislative reform above.

Eligibility for a RETT Refund

How do you know if you’re eligible for a RETT Refund? You are eligible if your house was sold after June 24, 2011, and it must be applied for within 4 years after the date of sale. To obtain a refund, the property must have been a homesteaded property.

What matters is not necessarily the sales price of the property or true cash value in the assessor’s terms, but the assessed value of the property. The assessed value of the property in the year of the sale must be lower than the assessed value in the year that you bought the property to qualify. This means that many sellers who appealed their high property tax assessments shortly after buying and winning might also be eligible after selling the home if they are otherwise eligible as well.

Documents Needed to Apply

The Michigan Department of Treasury requires that you fill out Form 2796 – Application for State Real Estate Transfer Tax (SRETT) Refund – in order to apply, along with a few key documents showing the purchase prices, settlement statements, and the assessed values for the years in question. Usually, the refund checks are processed within a matter of a couple of months. It is important to fill out these documents accurately and gather the right information, which is why it is recommended that you have an attorney assist you with the process. A FOIA request for the proper documentation may be necessary which an attorney can file for you as well.

Contact Fausone & Grysko, PLC Today

If you think you may be eligible for a RETT refund, please don’t hesitate to contact our office to speak about your eligibility. If you are eligible, we can gather the necessary documentation from you and file on your behalf, saving you the headache of dealing with this process. Contact Fausone & Grysko, PLC today at (248) 380-0000 to speak about your eligibility.