In Michigan and many other states the sale of a property provides an opportunity for the tax man to
There are also exceptions in the law that established these taxes (when are there ever not exceptions?), one of which was recently “clarified” by Michigan lawmakers. Exemption “U” provides that the seller is exempt from the Transfer Taxes if the SEV value of the property at the time of the sale is lower than the SEV value when the seller bought the property, i.e. it is still underwater, with negative equity, from the recent Great Recession.
While many areas in Michigan have recovered nicely the value that was lost in the Great Recession, not all area have shared equally in the comeback. Many properties (mostly residential homes) that were purchased at the peak of the “real estate bubble” that led to the Great Recession are still way below those values. In most cases the SEV values of those homes rose along with the bubble prices (although not as fast due to restrictions on how fast SEV’s could be raised by local assessors) and reached heights that are well above where we are today. Many severely depressed areas, like Detroit and some surrounding, older suburbs saw value drops exceeding 50% during the Great Recession, after having seen run-ups in value that just didn’t make sense in retrospect.
So, now people who bought during the peak years are trying to sell and are usually taking a loss. In addition, the SEV values were brought down relatively rapidly to reflect the market values losses of
If you seem to be eligible, you can download the form to request the refund here –
So, the bottom line is that you may still take a loss on a property that was just way overpriced during the heat of the real estate bubble; but, you don’t have to add insult to injury by being taxed by the state on that transaction. And if you did sell within the last four years, you may be able to get a refund. So “U” can help you.
I hope this post helped you, too.