Helen and her brother jointly own a rental property in Macomb County, Michigan. Helen purchases her brother's 50% ownership interest for $90,000, which represents half of the property's $180,000 fair market value. The deed transferring the brother's interest to Helen is recorded. Which of the following most accurately describes the Michigan real estate transfer tax consequences of this transaction?
Correct Answer
D) Transfer tax is calculated on $90,000 (the actual consideration paid for the 50% interest), and the brother owes both the state and county transfer taxes as the grantor
This transaction involves the transfer of a 50% ownership interest for $90,000 in actual consideration. Under the Michigan Real Estate Transfer Tax Act, the tax is calculated on the actual consideration paid ($90,000), not the full fair market value of the entire property. The brother (as the grantor conveying his 50% interest) owes both the state transfer tax (90 × $7.50 = $675.00) and the county transfer tax (90 × $1.10 = $99.00). Importantly, the sibling exemption under MCL 207.505 applies to transfers for nominal or no consideration—this is an arm's-length purchase at fair market value for the interest conveyed, so the family member exemption does not shield it from taxation.
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Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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