Patricia transfers her vacation cottage on Lake Michigan to her adult daughter for $1 as part of an estate planning strategy. The county assessor's records show the fair market value of the property is $450,000. Patricia's agent advises her that this transfer may be exempt from Michigan's real estate transfer tax. Which of the following most accurately describes the transfer tax treatment of this transaction under Michigan law?
Correct Answer
C) The transfer qualifies for an exemption from Michigan's real estate transfer tax because it is a transfer between family members
Under the Michigan Real Estate Transfer Tax Act (MCL 207.505), certain transfers are exempt from the state real estate transfer tax, including transfers between family members (such as parent to child). This exemption reflects the legislature's recognition that intra-family transfers for estate planning purposes should not trigger the transfer tax. Both the state and county transfer taxes generally follow the same exemption framework for qualifying family transfers.
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