Kevin purchased a home in Oakland County, Michigan three years ago for $200,000 and is now selling it for $310,000. His buyer's agent mentions that Kevin may qualify for a Michigan state transfer tax refund. Under what condition would Kevin be eligible for a refund of the state transfer tax he paid when he originally purchased the property?
Correct Answer
A) Kevin is eligible for a refund if he lived in the home as his principal residence and the current sale price is less than the original purchase price adjusted for inflation
Under MCL 207.526, Michigan allows a refund of the state real estate transfer tax paid by a seller if: (1) the property was the seller's principal residence, and (2) the current sale price is less than or equal to the original purchase price adjusted for inflation (using the CPI). This refund provision was designed to protect homeowners who sell at a loss or minimal gain. In Kevin's case, since he is selling for more than he paid, he would not qualify for the refund — but the condition described in Option A correctly states the legal standard.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
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- → The income approach to appraisal is most commonly used for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → External obsolescence in Oklahoma:
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