Closing on a residential home or commercial property in Michigan involves substantial mandatory statutory fees, title premiums, and transfer levies that catch both buyers and sellers off guard. Foremost among these is the Michigan Real Estate Transfer Tax, a transaction tax imposed at the county and state levels whenever real property or an interest therein is conveyed by deed or contract.

Whether you are preparing to list a home in Metro Detroit or navigating a commercial acquisition in West Michigan, knowing exactly who is responsible for each closing line item—and which statutory exemptions can eliminate thousands of dollars in transfer taxes—is essential for protecting your bottom line.

Here is the authoritative financial and legal breakdown of Michigan transfer taxes, title insurance requirements, and closing cost allocations for 2026.

The Statutory Structure: State vs. County Transfer Taxes

Real estate transfer taxes in Michigan are bifurcated across two separate statutes:

                  MICHIGAN REAL ESTATE TRANSFER TAX STRUCTURE
                                       │
           ┌───────────────────────────┴───────────────────────────┐
           ▼                                                       ▼
   State Transfer Tax (SRETT)                             County Transfer Tax
   • MCL § 207.525                                        • MCL § 207.505
   • $3.75 per $500 of value (0.75%)                      • $0.55 per $500 of value (0.11%)
   • Funneled to School Aid Fund                          • Retained in County General Fund

1. State Real Estate Transfer Tax (SRETT)

• Authority: Michigan Public Act 330 of 1993 (MCL § 207.525).
• Statutory Rate: $3.75 for each $500.00, or fraction thereof, of total value transferred. This equals $7.50 per $1,000 or an effective rate of 0.75%.
• Revenue Allocation: SRETT revenues are legally dedicated directly into the state’s School Aid Fund (SAF) to support K-12 public education financing.

2. County Real Estate Transfer Tax (CRETT)

• Authority: Michigan Public Act 134 of 1966 (MCL § 207.505).
• Standard County Rate (82 Counties): $0.55 for each $500.00, or fraction thereof, equating to $1.10 per $1,000 or an effective rate of 0.11%.
• Wayne County Rate: Under Section 505(b), counties with a population of 2,000,000 or more are authorized to assess a higher county transfer tax of up to $0.75 per $500.00 ($1.50 per $1,000 or 0.15%).

Calculation Example: Selling a $400,000 Michigan Home

On a residential transaction with a purchase price of $400,000: - State Tax (800 increments of $500 × $3.75): $3,000.00 - County Tax (800 increments of $500 × $0.55): $440.00 - Total Combined Transfer Tax: $3,440.00 (or $3,600.00 in Wayne County).

Who Pays What at the Closing Table?

By Michigan convention, closing obligations are divided between the buyer and seller according to long-standing contractual customs:

Key Statutory Exemptions from Michigan Transfer Tax

Section 207.526 of the Michigan Compiled Laws lists numerous conveyances that are completely exempt from State Real Estate Transfer Taxes:

1. The “SEV Decline” Exemption (MCL § 207.526(u))

One of the most powerful tax relief provisions in Michigan real estate law applies to homeowners who sell at a loss or stagnant value: - Criteria: If the property’s State Equalized Value (SEV) at the date of the conveyance is less than or equal to the SEV on the date the seller originally acquired the property, the transaction is 100% exempt from State Transfer Tax. - Arm’s Length Condition: The transaction cannot be a distressed sweetheart transfer to relatives; it must be an arm’s length sale reflecting fair market conditions. - Filing Form 2705 / Form 4583: The seller must provide an official Treasury exemption affidavit alongside local assessment records establishing the historical SEVs. - Savings: On a $350,000 sale, qualifying for Exemption (u) saves the seller $2,625 in state taxes at closing.

2. Other Core Statutory Exemptions

• Gifts and Nominal Consideration (MCL § 207.526(a)): Transfers where the total monetary consideration is less than $100.00.
• Security Interests (MCL § 207.526(b)): Deeds executed solely as security for a loan or debt, or assignments of mortgages.
• Spousal and Divorce Conveyances (MCL § 207.526(l)): Deeds conveying property between married individuals, or transferring real estate pursuant to a Michigan judgment of divorce or separate maintenance.
• Foreclosure Deeds (MCL § 207.526(c)): Deeds given in foreclosure sales or deeds-in-lieu of foreclosure to government agencies (HUD, VA, Fannie Mae).

Understanding Title Insurance Premiums & Recording Fees

Title insurance is universally required in Michigan transactions involving mortgage financing, divided into two distinct policies:

1. Owner’s Policy: Guarantees that the seller is delivering clear, marketable title free of unrecorded liens, tax judgments, forged instruments, or boundary encroachments. In Michigan, the seller customarily pays for the owner’s policy, which remains valid for as long as the buyer or their heirs retain ownership.
2. Lender’s Policy (Loan Policy): Guarantees that the mortgage lender has an enforceable first-priority lien on the real estate. The buyer pays for the loan policy, typically purchased simultaneously with the owner’s policy at a discounted “simultaneous issue” rate.

Register of Deeds Statutory Recording Fees (MCL § 600.2567)

Michigan enforces a uniform statewide recording fee structure across all 83 county register of deeds offices: - First Page of Any Document: $30.00 flat fee (which includes the state survey and remonumentation fees). - Each Additional Page: $3.00. - Certification Fee: $5.00 for certified copies. Typically, the buyer pays to record the new Warranty Deed and Mortgage, while the seller pays to record any Mortgage Discharges or releases of prior liens.

Property Tax Proration Formulas: Paid in Advance vs. In Arrears

Because Michigan property taxes are split between Summer Taxes (billed July 1) and Winter Taxes (billed December 1), closing statements must prorate these payments on a precise per-diem basis:

               MICHIGAN PROPERTY TAX BILLING CALENDAR
  July 1 (Summer Billing)                           Dec 1 (Winter Billing)
    │                                                 │
    ▼                                                 ▼
┌───────────────────────────────┐ ┌───────────────────────────────┐
│ State Education Tax (6 mills) │ │ County Operating & Parks      │
│ Local School Operating        │ │ Township / City Operating     │
│ City Operating & Millages     │ │ Public Library & Special SA   │
└───────────────────────────────┘ └───────────────────────────────┘

1. Paid in Advance Method (Most Common): Assumes that when a property tax bill is paid, it pays for the upcoming 365 days of municipal services. If the seller already paid the $4,000 summer tax bill in July and closes on September 1, the buyer reimburses the seller for the remaining 303 days of prepaid taxes.
2. Calendar Year Method: Prorates taxes based on the January 1 through December 31 calendar year regardless of billing dates. Always verify which proration method is stipulated in your purchase contract to avoid unexpected cash adjustments at closing.