Michigan Transfer Tax Explained: State and County Rates
Michigan charges a real estate transfer tax every time property changes hands. It’s split between the state and county levels, and the combined rate adds a meaningful amount to closing costs — particularly on higher-priced homes. On a $300,000 sale, the transfer tax totals $2,580. That’s real money, and knowing who pays it, how it’s calculated, and which transactions are exempt can save you from surprises at the closing table.
Transfer tax is one of those closing costs that gets overlooked during the home search but shows up prominently on the settlement statement. This guide breaks down the rates, exemptions, and negotiation norms so you know exactly what to expect when buying or selling in Michigan.
Michigan Transfer Tax Rates
| Tax Level | Rate | Per $500 of Sale Price | On a $300,000 Sale |
|---|---|---|---|
| State Transfer Tax | 0.75% | $3.75 | $2,250 |
| County Transfer Tax | 0.11% | $0.55 | $330 |
| Combined Total | 0.86% | $4.30 | $2,580 |
The rate is calculated on the full sale price. Both the state rate ($3.75 per $500) and the county rate ($0.55 per $500) apply to every taxable real estate transaction in Michigan. There are no local add-ons beyond the state and county rates — the combined $4.30 per $500 is the same statewide.
Transfer Tax by Sale Price
| Sale Price | State Tax | County Tax | Total Transfer Tax |
|---|---|---|---|
| $100,000 | $750 | $110 | $860 |
| $150,000 | $1,125 | $165 | $1,290 |
| $200,000 | $1,500 | $220 | $1,720 |
| $250,000 | $1,875 | $275 | $2,150 |
| $300,000 | $2,250 | $330 | $2,580 |
| $400,000 | $3,000 | $440 | $3,440 |
| $500,000 | $3,750 | $550 | $4,300 |
| $750,000 | $5,625 | $825 | $6,450 |
| $1,000,000 | $7,500 | $1,100 | $8,600 |
Use our closing cost calculator to see how transfer tax fits into your total closing costs, including title insurance, recording fees, and property tax prorations.
Who Pays the Transfer Tax?
Michigan custom (and the standard purchase agreement language) assigns transfer tax as follows:
- State Transfer Tax ($3.75 per $500): Paid by the seller. This is the strong custom throughout the state and is written into most standard purchase agreements.
- County Transfer Tax ($0.55 per $500): Paid by the seller. Same custom as the state tax.
However, transfer tax is negotiable. In a buyer’s market, sellers may ask buyers to split or assume the transfer tax. In a seller’s market (like Ann Arbor or Grand Rapids in 2026), sellers are unlikely to budge — they have other offers waiting. The key is to understand that custom puts it on the seller, but the purchase agreement can allocate it differently if both parties agree.
For sellers: on a $300,000 sale, transfer tax of $2,580 comes directly off your proceeds. Factor this into your net sheet when calculating what you’ll walk away with. Our mortgage calculator helps buyers estimate their monthly costs, while sellers can use the payoff amount to calculate net proceeds.
Exemptions from Transfer Tax
Michigan law provides several exemptions from real estate transfer tax. The most common ones relevant to individual homeowners:
| Exemption | State Tax Exempt? | County Tax Exempt? | Common Scenario |
|---|---|---|---|
| Transfer between spouses | Yes | Yes | Adding/removing spouse from deed, divorce |
| Transfer to/from living trust | Yes | Yes | Putting home in a revocable trust for estate planning |
| Transfer by inheritance (death) | Yes | Yes | Property passing through estate/probate |
| Transfer for less than $100 | Yes | Yes | Gift transfers within family |
| Transfer between parent and child | No (state tax applies) | Yes (county exempt) | Parents gifting property to children |
| Tax foreclosure sale | Yes | Yes | County treasurer auction sales |
| Court-ordered transfer (divorce) | Yes | Yes | Property awarded in divorce decree |
| Mortgage-related (security interest) | Yes | Yes | Deed to secure a loan (not a sale) |
The parent-child exemption is partial — it exempts the county transfer tax but not the state transfer tax. Use our rent affordability calculator for detailed numbers. On a $300,000 property transferred from parent to child, you’d still owe $2,250 in state transfer tax but save the $330 county portion. This catches many families off guard when transferring family homes between generations.
How to Claim an Exemption
Transfer tax exemptions are claimed at closing by filing a Real Estate Transfer Tax Valuation Affidavit (Form L-4260) with the county register of deeds. The title company or closing agent typically prepares this form. You must specify the exemption code that applies to your transaction. Common codes include:
- Code A: Written instruments between spouses
- Code B: Court-ordered transfers (divorce)
- Code D: Transfers creating or dissolving trusts
- Code H: Transfers between parent and child (county exempt only)
- Code I: Transfers from estate to heir
How Transfer Tax Compares to Other States
| State | Combined Transfer Tax Rate | Tax on $300,000 Sale |
|---|---|---|
| Michigan | 0.86% | $2,580 |
| Ohio | 0.40% | $1,200 |
| Illinois | 0.15–0.30% (varies by county) | $450–$900 |
| Indiana | None | $0 |
| Wisconsin | 0.30% | $900 |
| Pennsylvania | 2.00% | $6,000 |
| New York | 0.40–1.40% (varies) | $1,200–$4,200 |
Michigan’s transfer tax rate is moderate by national standards — higher than neighboring Ohio, Illinois, and Indiana, but well below states like Pennsylvania, Delaware, and New York. For buyers moving from a state without transfer tax (Indiana, for example), this is an unexpected closing cost. For sellers, it’s a real reduction in net proceeds that should be factored into pricing decisions.
Transfer Tax in Investment Transactions
Transfer tax applies to every property sale regardless of the buyer’s intent. This affects investors who buy and sell frequently:
- Flipping: You’ll pay transfer tax as the buyer (if negotiated) and then again as the seller when you resell. Two round trips of 0.86% each on a $200,000 property total $3,440 in transfer taxes alone.
- Wholesale transactions: Transfer tax applies at the final sale from the original seller to the end buyer. Assignment fees paid to the wholesaler are separate from the transfer tax.
- LLC or entity transfers: Transferring property between entities (e.g., from personal name to an LLC) generally triggers transfer tax unless an exemption applies. Some transfers to wholly-owned entities may qualify for exemption — consult a real estate attorney.
For Detroit investment properties, where purchase prices may be $50,000–$100,000, the transfer tax is relatively small ($430–$860). But on higher-value properties or multiple transactions per year, it adds up. Use our property tax calculator alongside the closing cost calculator for a complete picture of acquisition costs.
Recording and Payment
Transfer tax is paid at closing and submitted to the county register of deeds along with the deed and the transfer tax affidavit. The title company or closing agent handles the calculation and payment as part of the settlement process. The state portion is collected by the county and remitted to the Michigan Department of Treasury.
The transfer tax must be paid before the deed is recorded. If the tax isn’t paid, the deed won’t be recorded, and the transfer isn’t legally complete. This is not something the buyer or seller needs to manage directly — it’s handled automatically through the closing process.
Transfer Tax Revenue by County
Michigan’s 83 counties collectively process hundreds of thousands of real estate transactions annually. Wayne County (Detroit) processes the highest volume — roughly 40,000–50,000 property transfers per year — followed by Oakland County and Kent County (Grand Rapids). County transfer tax revenue funds register of deeds operations and is deposited into the county’s general fund. The state transfer tax revenue goes to Michigan’s School Aid Fund, meaning your transfer tax payment directly supports K-12 education funding. In fiscal year 2025, the state transfer tax generated approximately $750 million for Michigan schools. This funding mechanism makes the transfer tax politically durable — any proposal to reduce or eliminate it faces opposition from education advocates who rely on the revenue stream.
Late or Incorrect Filings
If the transfer tax affidavit (Form L-4260) contains errors — wrong sale price, incorrect exemption code, or missing information — the county register of deeds will reject the filing. This delays deed recording and can hold up the entire transaction. Common errors include listing the wrong consideration amount on transactions that involve seller credits, using an exemption code without supporting documentation, and failing to include the property tax identification number. Your title company should catch these issues before filing, but verify that your settlement statement matches the L-4260 amounts before signing. Corrections require a new affidavit and potentially a re-recording fee of $30–$60.
Transfer Tax on Common Michigan Transactions
Understanding how transfer tax applies to specific situations helps you plan accurately. Here are the most common scenarios Michigan homeowners face:
Standard Home Purchase
The most straightforward case: you buy a home for $300,000, the seller pays $2,580 in combined transfer tax at closing. The title company calculates the amount, collects it from the seller’s proceeds, and submits it to the county register of deeds along with the recorded deed. The buyer sees the transfer tax on the closing disclosure but doesn’t pay it (unless the purchase agreement specifies otherwise).
Divorce Property Transfers
Property transfers ordered by a Michigan court as part of a divorce decree are fully exempt from both state and county transfer tax. This applies whether the property goes to one spouse or is divided as part of a settlement. The key requirement: the transfer must be ordered by the court or included in the divorce judgment. A voluntary transfer between divorcing spouses before the judgment may not qualify — consult your attorney to ensure the exemption applies.
Transfers to a Living Trust
Michigan homeowners who create revocable living trusts for estate planning can transfer their home into the trust without paying transfer tax. This is one of the most common exemptions used in Michigan. The reverse — transferring from the trust back to the individual — is also exempt. However, if the trust sells the property to a third party, standard transfer tax applies. Many Michigan estate planning attorneys recommend putting your home in a trust to avoid probate, and the transfer tax exemption removes cost as an obstacle.
Parent-to-Child Transfers
This partial exemption trips up many Michigan families. Transferring property from a parent to a child exempts the county transfer tax ($0.55 per $500) but not the state transfer tax ($3.75 per $500). On a $300,000 property, you’d save the $330 county tax but still owe $2,250 in state tax. That’s a $330 savings — meaningful but not the full exemption many families expect. Note that this exemption also applies to transfers from child to parent.
Estate and Inheritance Transfers
Property passing through an estate after death — whether through probate or a trust — is exempt from both state and county transfer tax. This includes property distributed to heirs by a personal representative or trustee. The exemption applies regardless of the property’s value and regardless of the heir’s relationship to the deceased. If an heir later sells the property to a non-family member, standard transfer tax applies to that sale.
Transfer Tax Impact on Your Net Proceeds
Sellers often underestimate how much transfer tax reduces their takeaway. Here’s a complete seller cost analysis showing how transfer tax fits into the total picture:
| Sale Price | Agent Commissions (5.5%) | Transfer Tax (0.86%) | Other Costs (~1%) | Total Costs | Net Proceeds (before mortgage payoff) |
|---|---|---|---|---|---|
| $200,000 | $11,000 | $1,720 | $2,000 | $14,720 | $185,280 |
| $300,000 | $16,500 | $2,580 | $3,000 | $22,080 | $277,920 |
| $400,000 | $22,000 | $3,440 | $4,000 | $29,440 | $370,560 |
| $500,000 | $27,500 | $4,300 | $5,000 | $36,800 | $463,200 |
Transfer tax is the third-largest closing cost for Michigan sellers after agent commissions and mortgage payoff. Unlike commissions (which are negotiable) and mortgage payoff (which is fixed), transfer tax is calculated by formula and cannot be reduced — only shifted between parties through negotiation. Our seller net proceeds calculator computes your estimated takeaway after all costs.
Transfer Tax and Michigan’s Property Tax System
Transfer tax and property tax are separate systems, but they interact at one critical point: when property changes hands, the county assessor is notified through the transfer tax affidavit (Form L-4260). This filing triggers the uncapping of taxable value under Proposal A. In other words, paying transfer tax at closing is the paperwork event that also resets your property tax basis to the full State Equalized Value.
For buyers, this means you should understand both costs simultaneously. On a $300,000 home where the previous owner’s taxable value was $120,000, the uncapping could increase annual property taxes by $2,000–$4,000 — a far larger ongoing cost than the one-time $2,580 transfer tax. Your real estate agent should calculate both the transfer tax and the uncapped property tax before you make an offer. Use our property tax calculator to estimate the post-uncapping tax burden.
How to Minimize Transfer Tax Costs
While the rate is fixed by law, there are legitimate strategies to reduce transfer tax exposure:
- Negotiate who pays. The purchase agreement determines who pays transfer tax. In a buyer’s market, sellers may agree to split it. In a seller’s market, buyers may offer to assume it as a sweetener. Either way, the total amount doesn’t change — just who writes the check.
- Exclude personal property. Transfer tax applies to real property only. If the sale includes personal property (appliances, furniture, window treatments), separately itemizing these items on the purchase agreement reduces the taxable amount. On a $300,000 sale with $5,000 in personal property, you’d save $43 in transfer tax. Small, but legitimate.
- Use exemptions correctly. If your transaction qualifies for an exemption, make sure the title company files the correct exemption code on the L-4260 form. Common errors include failing to claim the trust exemption on trust-to-individual transfers or missing the parent-child exemption on family transfers.
- Plan estate transfers. Transferring property into a revocable trust during your lifetime avoids transfer tax. When the trust later distributes property to heirs after death, that transfer is also exempt. This two-step approach avoids transfer tax entirely across two generations.
For more on total closing costs in Michigan, see our closing costs guide. The affordability calculator helps you budget for all acquisition costs, including transfer tax, as part of your home purchase plan.
Compare With Other States
Considering other markets? Here’s how other states compare:
- Connecticut Conveyance Tax Explained: What Buyers and Sellers Pay
- New York Mansion Tax Explained: Rates, Thresholds, and Who Pays
- Illinois Transfer Tax Explained: State, County, and City Rates
Frequently Asked Questions
How much is Michigan transfer tax?
The combined state and county transfer tax is $4.30 per $500 of sale price, or 0.86% of the total sale price. On a $300,000 sale, that’s $2,580. The state portion is $3.75 per $500 (0.75%), and the county portion is $0.55 per $500 (0.11%).
Who pays transfer tax in Michigan?
By custom, the seller pays both the state and county transfer tax. This is reflected in the standard Michigan purchase agreement. However, it’s negotiable — in some transactions, the buyer and seller agree to split the cost. In most standard transactions, expect the seller to cover it.
Is transfer tax deductible?
For sellers, the transfer tax is included in the cost of sale and reduces your taxable capital gain on the property. For buyers, transfer tax (if you pay it) is added to your cost basis in the property, which reduces your capital gain when you eventually sell. It’s not a direct income tax deduction in the year paid. Consult a tax professional for your specific situation.
Are there any transfers exempt from Michigan transfer tax?
Yes. Transfers between spouses, transfers to/from revocable trusts, transfers by inheritance, court-ordered transfers (divorce), and tax foreclosure sales are fully exempt from both state and county transfer tax. Transfers between parents and children are exempt from county tax only — the state tax still applies. The exemption must be claimed at closing on the transfer tax affidavit.
How does Michigan transfer tax compare to other states?
Michigan’s 0.86% combined rate is moderate nationally. Neighboring Indiana has no transfer tax, Ohio charges 0.40%, and Illinois charges 0.15–0.30%. States like Pennsylvania (2.00%) and Connecticut (1.25–2.25%) charge significantly more. Michigan’s rate adds about $2,600 to a $300,000 transaction. Our affordability calculator and down payment savings calculator help you plan for these costs.