Understanding Wayne County’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you’re selling your Wayne County home, you might have questions about transfer taxes. How do they work? How much are they? Who pays for them? Don’t worry. Transfer taxes aren’t complicated, and HomeLight is here to help.
Transfer taxes are fees levied by local or state authorities when real property (like a home) changes ownership. Transfer tax rates can differ significantly based on location and can have a big impact on the overall cost of your transaction and your bottom line.
This guide will explain how transfer taxes work in Wayne County, including their cost, who is liable for them, and any possible exemptions. Additionally, we will explain how transfer taxes can affect your capital gains burden and why working with a real estate agent is a great idea.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
What are transfer taxes?
Real estate transfer taxes are charged by state or local governments when property ownership is transferred from one individual to another. According to the Federal Trade Commission, these taxes are due when the title of a property, essentially the document that verifies your legal ownership, is officially transferred to a new owner.
The amount owed in transfer taxes can vary significantly based on the property’s location, as different states, counties, and cities establish their own rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects.
Who pays for transfer taxes?
Sellers are responsible for paying transfer taxes in Wayne County.
What are the types of transfer taxes?
Transfer taxes typically vary according to local regulations but can generally be categorized into three types: state, city, and county, depending on the state. Here’s a brief overview of how this works in Wayne County.
State transfer taxes
For property transfers in Michigan, a documentary transfer tax of $3.75 per $500 of the home’s value is applied to all non-exempt real estate transactions. However, additional taxes may apply based on your specific location in Michigan.
County transfer taxes
In Wayne County, the county transfer tax rate is $0.55 per $500 of the home’s value. This is in addition to the state’s transfer tax rate.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or local neighborhood organization. Since these can vary widely by location, consulting a professional is advisable.
If you’re selling your home without a realtor, seeking professional advice can clarify some of the nuances of the process and provide a clearer picture of what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Transfer taxes are, unfortunately, not eligible for tax deduction.
However, you can lower the amount you pay in capital gains taxes.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
According to the IRS, sellers can treat paid transfer taxes as selling costs, subtracting them from their home’s closing sale price. This allows them to minimize the capital gains taxes owed on any profit earned.
Transfer tax exemptions
Some sellers in Michigan and Wayne County may be eligible for exemptions from transfer taxes, depending on the transaction and their relationship to the buyer. Some situations where this can apply include:
- If the property’s value is under $100.
- Transfers between spouses or within a married couple.
- Conveyances from an individual to their child, stepchild, or adopted child.
- Conveyances from an individual to their grandchild, step-grandchild, or adopted grandchild.
- If the property sells for less than the purchase price in an “arm’s-length” sale. An arm’s-length sale occurs when the buyer and seller act in their best interests to receive the best possible price for the property.
Estimating transfer taxes for your home sale
To better understand what you can earn from selling your Wayne County home, consider using HomeLight’s Net Proceeds Calculator. This tool accounts for essential costs such as closing expenses, transfer taxes, agent fees, and any improvements made to the property, providing a clear estimate of your potential earnings from the sale.
Collaborating with a top real estate agent can also offer valuable insights tailored to your needs. HomeLight can connect you with a top Wayne County real estate agent today who can give you the peace of mind needed to sell your home quickly and confidently.
Editor’s note: This post is intended for educational purposes only and does not serve as legal or financial advice. References to Wayne County area tax services or attorneys should not be interpreted as endorsements.
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