Using a quitclaim deed to convey property in Michigan, whether as a sale or gift, may accumulate filing fees and taxes. Explore your potential obligations so you know what to expect.
Filing Fees
Mich. Comp. Laws § 600.2567 requires you to pay a filing fee of $30 when you submit any deed, including a quitclaim deed, to the register of deeds. Additionally, you can pay $5 to certify a recorded document and $1 per page to obtain copies of the certified document.
Taxes
1. Real Estate Transfer Tax
Michigan charges a real estate transfer tax on the consideration for the property at the time of the sale. The state transfer tax is $3.75 per $500 of the property’s sales price.
In addition, each county can set an additional transfer tax rate per Mich. Comp. Laws § 207.504. Counties with less than two million people can set an additional rate of $0.55 per $500, while counties with more than two million people can set an additional rate of no more than $0.75 per $500.
Transfer Tax Exemptions
According to Mich. Comp. Laws § 207.526, there are several potential exemptions to the property transfer tax. They include the following:
- Transfers in which the total consideration for the property is less than $100
- Transfers in which the grantor is the United States, the state of Michigan, or a political subdivision of those entities
- Transfers between spouses
- Transfers to children, including stepchildren or adopted children
- Transfers to grandchildren, including step-grandchildren or adopted grandchildren
- Quitclaim deeds correcting title flaws
- A transfer between a corporation and its stockholders or creditors
- Transfers between LLCs and their members
- Joint tenancy transfers, in which one party already has a partial interest in the property
If you believe that you may be exempt from transfer taxes under these terms, consult a tax professional to pay the correct taxes on your property.
2. US Gift Tax
If the grantor gives property to the grantee for no consideration, they may have to pay a gift tax if the property value exceeds a certain amount. For the 2024 tax year, the grantor will have to pay gift tax on any gifts valued over $18,000 per recipient. Please fill out Form 709 to report gifts and determine the amount of tax you must pay.
3. Capital Gains Tax
Michigan charges capital gains tax at the ordinary income rate of 4.25% regardless of the property value. If you sell the property to the grantee for a profit, you must pay the state capital gains tax.
Grantors must also pay federal capital gains tax. The federal tax rate for capital gains will vary depending on whether your gains are long-term or short-term (IRS Topic. No. 409). Short-term capital gains are taxed at the normal federal income rates, so it will depend on your tax bracket. However, long-term capital gains receive special treatment and can be subject to rates of 0, 15, or 20%.
