May 15, 2008, Introduced by Rep. Bieda and referred to the Committee on Tax Policy.
A bill to amend 1993 PA 330, entitled
"State real estate transfer tax act,"
by amending sections 2, 3, 6, and 12 (MCL 207.522, 207.523,
207.526, and 207.532), section 6 as amended by 2003 PA 128.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Controlling interest" means more than 80% of the total
value of all classes of stock of a corporation; more than 80% of
the total interest in capital and profits of a partnership,
association, limited liability company, or other unincorporated
form of doing business; or more than 80% of the beneficial interest
in a trust.
(b) (a)
"Person" means an
individual, partnership,
corporation, limited liability company, association, governmental
entity, or other legal entity. If used in a penalty clause, person
includes the partners or members of a firm, a partnership, or an
association and the officers of a corporation.
(c) (b)
"Property" includes land,
tenements, real estate, and
real property and all rights to and interests in land, tenements,
real estate, or real property. Unless otherwise exempted by section
6, the tax imposed under section 3 shall also be payable upon
documents that convey or transfer any beneficial interest in
property, even though that interest may be designated as personal
property.
(d) (c)
"Tax" means the state
real estate transfer tax imposed
under this act.
(e) "Transfer", unless otherwise exempt under this act, means
the conveyance of title to or other transfer of a present interest
or beneficial interest or any other interest in property by any
method, including, but not limited to, sale, exchange, assignment,
surrender, mortgage, foreclosure, transfer in lieu of foreclosure,
option, trust, or conveyance upon liquidation, or by a receiver, or
transfer or acquisition of a controlling interest in any entity
with an interest in the property.
(f) (d)
"Treasurer" means the
state treasurer.
(g) (e)
"Value" means the current
or fair market worth in
terms of legal monetary exchange at the time of the transfer
whether actually paid or required to be paid for the property
interest, including payment for an option or contract to purchase
property, whether or not expressed in the deed and whether paid or
required to be paid by money, property, or any other thing of
value. The tax shall be based on the value of the real property
transferred and shall be collected at the time the instrument of
conveyance is submitted for recording. In the case of a controlling
interest in any entity that owns real property, value shall mean
the value of the real property or interest in the property,
apportioned based on the percentage of the ownership interest
transferred or acquired in the entity.
Sec. 3. (1) There is imposed, in addition to all other taxes,
a tax upon the following written instruments executed within this
state when the instrument is recorded:
(a) Contracts for the sale or exchange of property or any
interest in the property or any combination of sales or exchanges
or any assignment or transfer of property or any interest in the
property.
(b) Deeds or instruments of conveyance of property or any
interest in property, for consideration.
(c) Contracts for the transfer or acquisition of a controlling
interest in any entity with an interest in the property even though
that interest may be designated as personal property.
(2) The person who is the seller or grantor of the property is
liable for the tax imposed under this act.
Sec. 6. The following written instruments and transfers of
property are exempt from the tax imposed by this act:
(a) A written instrument in which the value of the
consideration for the property is less than $100.00.
(b) A written instrument evidencing a contract or transfer
that is not to be performed wholly within this state only to the
extent the written instrument includes land lying outside of this
state.
(c) A written instrument that this state is prohibited from
taxing under the United States constitution or federal statutes.
(d) A written instrument given as security or an assignment or
discharge of the security interest.
(e) A written instrument evidencing a lease, including an oil
and gas lease, or a transfer of a leasehold interest.
(f) A written instrument evidencing an interest that is
assessable as personal property.
(g) A written instrument evidencing the transfer of a right
and interest for underground gas storage purposes.
(h) Any of the following written instruments:
(i) A written instrument in which the grantor is the United
States, this state, a political subdivision or municipality of this
state, or an officer of the United States or of this state, or a
political subdivision or municipality of this state, acting in his
or her official capacity.
(ii) A written instrument given in foreclosure or in lieu of
foreclosure of a loan made, guaranteed, or insured by the United
States, this state, a political subdivision or municipality of this
state, or an officer of the United States or of this state, or a
political subdivision or municipality of this state, acting in his
or her official capacity.
(iii) A written instrument given to the United States, this
state, or 1 of their officers acting in an official capacity as
grantee, pursuant to the terms or guarantee or insurance of a loan
guaranteed or insured by the grantee.
(i) A conveyance from a husband or wife or husband and wife
creating or disjoining a tenancy by the entireties in the grantors
or the grantor and his or her spouse.
(j) A conveyance from an individual to that individual's
child, stepchild, or adopted child.
(k) A conveyance from an individual to that individual's
grandchild, step-grandchild, or adopted grandchild.
(l) A judgment or order of a court of record making or ordering
a transfer, unless a specific monetary consideration is specified
or ordered by the court for the transfer.
(m) A written instrument used to straighten boundary lines if
no monetary consideration is given.
(n) A written instrument to confirm title already vested in a
grantee, including a quitclaim deed to correct a flaw in title.
(o)
A land contract in which the legal title does not pass to
the
grantee until the total consideration specified in the contract
has
been paid. conveyance that
meets 1 of the following:
(i) A transfer between any corporation and its stockholders or
creditors, or between any limited liability company and its members
or creditors when the transfer is to effectuate a dissolution of
the corporation or limited liability company and it is necessary to
transfer the title of real property from the entity to the
stockholders, members, or creditors.
(ii) A transfer between any limited liability company and its
members if the ownership interests in the limited liability company
are held by the same persons and in the same proportion as in the
limited liability company prior to the transfer.
(p) A written instrument evidencing the transfer of mineral
rights and interests.
(q) A written instrument creating a joint tenancy between 2 or
more persons if at least 1 of the persons already owns the
property.
(r) A transfer made pursuant to a bona fide sales agreement
made before the date the tax is imposed under sections 3 and 4, if
the sales agreement cannot be withdrawn or altered, or contains a
fixed
price not subject to change or modification. However, a sales
agreement
for residential construction may be adjusted up to 15% to
reflect
changes in construction specifications.
(s) A written instrument evidencing a contract or transfer of
property to a person sufficiently related to the transferor to be
considered a single employer with the transferor under section
414(b)
or (c) of the internal revenue code of 1986, 26 U.S.C. USC
414.
(t) A written instrument conveying an interest in property for
which an exemption is claimed under section 7cc of the general
property tax act, 1893 PA 206, MCL 211.7cc, if the state equalized
valuation of that property is equal to or lesser than the state
equalized valuation on the date of purchase or on the date of
acquisition by the seller or transferor for that same interest in
property. If after an exemption is claimed under this subsection,
the sale or transfer of property is found by the treasurer to be at
a value other than the true cash value, then a penalty equal to 20%
of the tax shall be assessed in addition to the tax due under this
act to the seller or transferor.
(u) A written instrument transferring an interest in property
pursuant to a foreclosure of a mortgage including a written
instrument given in lieu of foreclosure of a mortgage. This
exemption does not apply to a subsequent transfer of the foreclosed
property by the entity that foreclosed on the mortgage.
(v) A written instrument conveying an interest from a
religious society in property exempt from the collection of taxes
under section 7s of the general property tax act, 1893 PA 206, MCL
211.7s, to a religious society if that property continues to be
exempt from the collection of taxes under section 7s of the general
property tax act, 1893 PA 206, MCL 211.7s.
Sec. 12. (1) The tax imposed by this act shall be paid only
once on each transfer recorded and in the county in which the
written
instrument is required to be recorded. A
tax shall not be
imposed
on a written instrument that transfers property if the
written
instrument is given and the transfer made pursuant to a
written
executory contract upon which the tax was previously paid.
If there is a conveyance of real estate that was previously sold by
a seller or grantor under a land contract or other executory
contract, a credit for the amount of any tax previously paid by
that transferor or a person sufficiently related to the transferor
to be considered a single employer with the transferor under
section 414(b) or (c) of the internal revenue code, 26 USC 414, on
the prior transfer shall be given to the seller or grantor toward
the tax due upon the written instrument recorded transferring the
same real estate and any improvements upon the real estate so that
the tax imposed is only on the new consideration given for the
property. If the tax due upon the transfer is greater than the
credit given under this section, the difference shall be paid by
the grantor or seller. If the credit allowed is greater than the
amount of tax due, no refund or carryover credit shall be allowed.
A written instrument that is evidence of indebtedness or of a
contract right is subject to the tax imposed by this act only to
the extent of the new consideration given for the property. A
written instrument that is given to supplement, reform, or correct
a prior written instrument is subject to the tax imposed by this
act only to the extent of the new consideration given for the
property.
(2) A written instrument that would be subject to the tax
imposed by this act except for the provisions of this section shall
state on its face that the instrument is exempt by reason of the
prior payment or partial payment of the tax on another written
instrument executed on part of the same transaction and the date of
payment.
(3) The tax imposed under this act shall be paid to the county
treasurer where the property is located no later than the fifteenth
day after the delivery of the instrument effecting the conveyance
by the seller or grantor to the buyer or grantee or no later than
the fifteenth day after the transfer of a controlling interest in
any entity with an interest in the property. For purposes of this
section, the date of the instrument effecting the transfer shall be
presumed to be the date of delivery of the instrument.
(4) The burden of proving to the satisfaction of the
department the value of the property transferred shall be on the
person liable for payment of the tax.