A Michigan couple divorces, and as part of the divorce settlement, the wife receives the marital home. The husband's name is then removed from the deed and the wife becomes the sole owner. The home currently has a taxable value of $110,000 and an SEV of $165,000. What happens to the taxable value after this transfer?
Correct Answer
B) The taxable value remains at $110,000 because transfers between spouses pursuant to a divorce are excluded from the definition of a transfer of ownership under Proposal A
Under MCL 211.27a(7), certain transfers are excluded from the definition of 'transfer of ownership' for Proposal A purposes, meaning they do NOT trigger uncapping of the taxable value. Transfers between spouses resulting from a divorce decree or judgment of separate maintenance are specifically excluded. Therefore, when the wife receives the home through the divorce settlement, the taxable value remains at $110,000 and does not uncap to the SEV of $165,000. This is distinct from the transfer tax exemption and is a specific Proposal A carve-out.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
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