Real Estate Transfer Tax Refund Clarity

At the close of 2015, Governor Snyder signed into law legislation providing clarity to Michigan's State Real Estate Transfer Tax. House Bill 4173, sponsored by Realtor®-member and Representative Dave Maturen (R-Brady Twp.) revises the State Real Estate Transfer Tax to clarify two items:

1. The party that paid the transfer tax may request the refund if a refund is due, and
2. Clarify that Exemption (u) applies when the SEV at the time of sale of a Principle Residence is less than or equal to the original SEV on the purchase.

The Michigan Supreme Court recently broadened the application of Exemption (u) by removing the requirement that True Cash Value be realized in a transfer. The legislation enshrines this change, offering important clarity and tax relief to distressed sellers. 

In addition, this legislation gives buyers the same refund rights as sellers when it is determined that the transfer tax was paid unnecessarily by a buyer. Refund rights under the Sate Transfer Tax are available up to 4 years and 15 days from a transfer.

To better aid members in reaching out to their former and current clients that may qualify, the refund application form is found here. (Please note that the current refund form does not reflect the change in law. The State Treasury will be updating the form in the coming weeks).

The following Q&A's are intended to illustrate exemption (u)'s applicability:
 
QUESTION: Some clients of mine sold their principal residence in 2013 and the SEV was lower at the time they sold it than when they purchased it. They just found out that they might be entitled to a refund of the state transfer tax they paid. They sold the house at a profit; will they still be entitled to the refund?
 
ANSWER: YES, to qualify for the state transfer tax refund, the SEV at the time of purchase must be higher than the SEV at the time of sale. The fact that they sold the house at a profit has no effect on their ability to get a refund.
 
QUESTION: Some clients of mine bought vacant land in 2011 on which they had a house constructed in 2012. They sold the house in late 2014. Will they be entitled to a state transfer tax refund if the SEV of their property at the time the house was completed was more than at the time of sale?
 
ANSWER: NO, since at the time of purchase, the land was vacant, they cannot claim a refund of the state transfer tax since the property was not their principal residence at the time of purchase.

Source: Greater Metropolitan Area Realtors

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Michigan home prices rose 9% in January vs. 2014

JC Reindl, Michigan.com12:29 p.m. EST March 3, 2015

Homes prices across Michigan were 9% higher in January than a year earlier, outpacing the national 5.7% rate Michigan experienced the biggest

Michigan's real estate market has continued to improve in the new year.

Homes prices across the state were 9% higher in January compared to the same month a year ago, outpacing the national 5.7% year-over-year increase, according to new housing numbers released today by California-based real estate data firm CoreLogic

The data also shows that Michigan home prices remain 17.3% off their peak reached in late 2005. The nationwide figure was 12.7% below the April 2006 price peak.

The CoreLogic report did not specify actual prices or draw comparisons. The closely watched Standard & Poor's/Case-Shiller Home Price index has home prices in metro Detroit about 41% below the national average.

CoreLogic predicts that nationwide prices will rise 5.3% between this January and January 2016.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Foreclosures in the market are dropping

Here is an on line article from Michigan Radio.

"Is America climbing out of the foreclosure hole dug during the Great Recession?

That's the question tackled in reports from Realty Trac, which keeps a close watch on real estate data. Its Midyear 2014 U.S. Foreclosure Market Report is out today.

The report shows that U.S. foreclosure activity in June decreased 16% from a year ago to lowest level since July 2006, the month before the housing-price bubble burst. In Michigan, the foreclosure activity was also back to a lower level than the number before the housing bust.

Daren Blomquist, a Vice President with Realty Trac, discussed three reasons behind this slowdown in foreclosures.

1. In many states including Michigan, the market has worked through the bad loans that triggered the foreclosure crisis.
2. The rise of home prices since March 2012 has helped troubled home owners regain equity in their properties.
3. Aggressive foreclosure prevention efforts have helped people avoid foreclosure.

According to Blomquist, the number will continue to go down over the next six months nationwide, and Michigan foreclosure numbers should start to flat line. 

“This doesn’t mean that the market is completely healed in Michigan. However, this is one piece of the puzzle that needs to be in place for a healthy market,” Blomquist said."

When the number of foreclosure decreases, it can only help keep the values of all others maintain and increase their value.  

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page. 

-----

Michigan's real estate industry should see more improvement in 2014

Credit Steve Carmody of Michigan Radio

Michigan is starting 2014 with its housing market in better shape than it’s been in in years.

The number of new home foreclosures is actually smaller than it was in 2006, before the recession began. Home prices are also improving.

But Daren Bloomquist with Realty Trac says there are still many Michigan homeowners who owe more on their mortgages than their homes are worth. He says 2014 may finally turn that around.

“As those home prices continue to rise in 2014, more of those underwater homeowners will be able to get out from under the negative equity burden and sell their properties,” says Bloomquist.

Bloomquist says there are still a large number of Michigan homeowners facing foreclosure and banks are still trying to sell off a large inventory of previously foreclosed homes.

Share

Schuette Salutes Veterans, Announces Homeowners Assistance Program Has Awarded More Than $1 Million to Help Michigan Veteran

Schuette Salutes Veterans, Announces Homeowners Assistance Program Has Awarded More Than $1 Million to Help Michigan Veterans

michigan.realestaterama.com » by Michigan RealEstateRama

LANSING – November 11, 2013 – (RealEstateRama) –Attorney General Bill Schuette today offered a special Veterans Day message in advance of Monday’s holiday. In addition to thanking veterans for their service, Schuette also announced the distribution of more than $1 million in grants to struggling military and veteran homeowners impacted by the foreclosure crisis. The funds were distributed through the Michigan Veterans Homeowners Assistance Program Schuette announced with the Michigan Veterans Affairs Agency in May 2013. MiVHAP has helped at least 154 homeowners in 43 counties across the state, according to recent numbers provided by the Michigan Veterans Affairs Agency.

“On Veterans Day, we honor the sacrifice, strength and courage of our military members in grateful appreciation for the service to our nation,” said Schuette. “Our brave veterans risk their lives to fight for our freedoms daily, and they should never be forced out of their homes illegally. I am pleased with the success of the Veterans Homeowners Assistance Program so far, and I encourage additional veterans and their families seeking foreclosure assistance to apply.”

In May 2013, Schuette and Barnes launched the Michigan Veterans Homeowners Assistance Program (MiVHAP), to provide financial assistance to Michigan military service members, veterans and their families who have struggled with the consequences of the mortgage foreclosure crisis. Schuette and Barnes were joined at the announcement by Anne Marie Dutcher, Administrator of the Michigan Veterans Trust Fund, the state entity charged with administering the new program.

Federal regulators and court settlements have documented approximately 900 service members nationwide who were foreclosed upon in violation of the federal Servicemembers Civil Relief Act. At least 6,000 more were overcharged during the crisis by JP Morgan. The case of Sgt. James B. Hurley, a disabled veteran who lost his Hartford, Michigan home to foreclosure while serving his country in Iraq vividly illustrated the problem of lenders illegally foreclosing upon veterans. Sgt. Hurley was forced to pursue private litigation for nearly four years before settling with Deutsche Bank in 2011.

MiVHAP will provide financial grant assistance to military service members: Active, Reserve, Air and Army National Guard, and honorably discharged Veterans living or having lived in a home in Michigan for hardship related to the foreclosure crisis since 2006. Surviving spouses of Michigan military service members whose death occurred in combat since 2006 and currently face foreclosure challenges may also be eligible for financial assistance.

Michigan has approximately 700,000 veterans and 12,000 troops active in the Michigan National Guard. More than 22,000 Michigan National Guard members have deployed since September 11, 2001, with 300 currently deployed. The average deployment period is one year, following a two month mobilization and training period. The Michigan Guard has some of the most actively deployed combat units in the country, with the average Michigan soldier deploying four to five times throughout their military career.

MiVHAP is a separate program from the Michigan Veterans Trust Fund, but the new program will be administered by the Michigan Veterans Trust Fund state office staff. Grants are awarded on a first-come, first served basis and will be made until the money runs out. Grants that are awarded will be sent directly to vendors, including lenders or government entities owed back taxes. Each grant is based on individual circumstances of an application, but priority will be given to requests seeking to avoid mortgage defaults, foreclosure and property tax foreclosure.

How Military Service Members and Veterans Can Apply for MiVHAP Grants

Military service members and veterans interested in applying for MiVHAP grants can request applications and obtain more information by calling 517-284-5296 or by visiting www.michigan.gov/veterans. Requests by mail may be sent to: Michigan Veterans Trust Fund, MiVHAP, P.O. Box 30104, Lansing, MI 48909.

National Mortgage Settlement

MiVHAP was made possible by National Mortgage Settlement, which addressed allegations of faulty foreclosure processes and poor servicing of mortgages that harmed Michigan homeowners. The historic joint federal-state settlement was signed by 49 states and the nation’s five largest banks and lenders: Ally/GMAC, Bank of America, Citi, JP Morgan Chase, and Wells Fargo. The settlement required the bank mortgage servicers to provide the participating states, including Michigan, up to $25 billion dollars in monetary sanctions and relief. Michigan residents are expected to receive approximately $780 million in benefits, including the $97 million payment directly to the State of Michigan, which formed the Homeowner Protection Fund.

Schuette noted questions have been raised about whether the banks are following the settlement’s comprehensive reforms to improve customer service and transparency for borrowers. In response, Schuette has sent a letter outlining his concerns about banks meeting certain deadlines and filing requirements for borrowers to the national mortgage settlement’s independent monitor, Joseph A. Smith, Jr. As a member of the formal state monitoring committee, Schuette will be closely involved in all efforts to protect Michigan homeowners by ensuring full and complete compliance by the banks.

For additional information, please visit: www.michigan.gov/mortgagesettlement.

Legal Protections for Military Service Members and Veterans

Schuette noted Michigan veterans and their loved ones can visit the Attorney General’s website at www.michigan.gov/vetresources to learn about important legal benefits and special protections afforded to current and former service members. Military agencies and nonprofit organizations who offer legal assistance are also highlighted.

State of Michigan offices, including the Attorney General’s office, will be closed on Monday November 11, 2013 in observance of Veterans Day.

Morris Hagerman Properties Index

Morris Hagerman Real Estate One Website

Help for people behind on their property taxes

A letter from Andy Meisner, Oakland County Treasurer

Dear Friend:

This letter is to inform you of a new program to help pay your delinquent property taxes up to $30,000 if you face a hardship preventing you from paying your property taxes.

The program is called the “Step Forward Michigan Loan Rescue Program for Property Tax Assistance,” and is helping some eligible homeowners pay off their delinquent taxes. You may be eligible if the following criteria apply to you: 

1. Owner Occupied Homes Only – You must live in your home, no land contracts.
2. Delinquent Taxes – You must owe delinquent taxes, interest, or fees on that home.
3. Hardship – You must face a hardship preventing you from paying your taxes.
4. Cash Reserves – Less than 1.5 times your annual property tax bill in your account.

Applicants are encouraged to apply with help from our partner agencies, including: Community and Home Improvement, Oakland County; Community Housing Network; GreenPath; JVS; Lighthouse; New Hope; OLHSA; Southwest Housing Solutions; and University of Detroit-Mercy Legal Aid Clinic.

With the help of your certified housing counselor, apply for the “Step Forward Michigan Loan Rescue Program” online at www.stepforwardmichigan.org or by calling 866-946-7432. Please contact our office at 248-858-0624 and we will get you connected with a certified housing counselor to begin the application process. 

Taxpayers with delinquent taxes should schedule a Taxpayer Assistance Meeting with

our office to arrange a payment plan and prevent foreclosure. 

Sincerely,

Andy Meisner

Oakland County Treasurer

Morris Hagerman Properties Index

Morris Hagerman Real Estate One Website

A New Michigan Tax Law May Help Families Avoid Uncapping on Certain Inter-Family Real Property Transfers

A New Michigan Tax Law May Help Families Avoid Uncapping on Certain Inter-Family Real Property Transfers

Article By: Judith Fertel Layne, Dickinson Wright PLLC

Effective December 31, 2013, a parent can transfer residential real estate located in Michigan to his or her child without uncapping the taxable value of the property if the child continues to use the property for residential purposes. Subject to several exemptions, the Michigan General Property Tax Act provides that upon a transfer of ownership of real property, the property’s taxable value is increased to the property’s state equalized value, causing the new owner’s property taxes to increase. Historically, this included transfers of residential real estate from parent to child. This often created a hardship for children inheriting a family residence, including a family cottage that had been owned by the family for decades, because the property’s real estate taxes could increase dramatically upon the transfer. As a result, the Michigan Legislature recently created a new exemption from the definition of “transfer of ownership” to exclude “a transfer of residential real property if the transferee is related to the transferor by blood or affinity to the first degree and the use of the residential real property does not change following the transfer.” MCL 211.27a(7)(s). Accordingly, a child can now receive residential real property from his parent, by gift or inheritance, without fear that the real estate taxes will increase meaningfully.

While this change to the statute will be good news for many families who wish to keep vacation or other residential property in the family for generations, the statute, as currently drafted, is not as flexible as some families may desire. The statutory language makes it clear that the property must pass from parent to child. Property held in a parent’s trust is not included.[1]  Because this will create planning problems for many families, the probate bar is currently pressing the Legislature to broaden the statute to include transfers from a trust. In addition, the Michigan Department of Treasury may create regulations that will establish that a transfer from a trust would fall within the exemption.

Families wishing to take advantage of this new law should be mindful of the statutory language as it currently exists and as it may be modified in the future to make sure that any proposed transfer falls within the exemption. In addition to the limitation on transfers from trust, the exemption only applies to a transfer if the transferee is related to the transferor by blood or affinity “to the first degree.” As a result, a transfer to the transferor’s grandchild would not fall within the exemption. Because of these traps for the unwary, families may wish to seek guidance from counsel prior to transferring residential real estate within the family.

[1] Indeed, the statutory language can even be read to imply that a transfer from a parent’s

Morris Hagerman Properties Index

Morris Hagerman Real Estate One Website

August construction spending is up 7.1 percent over last year

For Release at 10:00 A.M. EDT, Tuesday, October 22, 2013

Joseph Huesman, Linnet Holland, or Trent Langley (301) 763-1605

AUGUST 2013 CONSTRUCTION AT $915.1 BILLION ANNUAL RATE

The U.S. Census Bureau of the Department of Commerce announced today (October 22, 2013) that construction spending during August 2013 was estimated at a seasonally adjusted annual rate of $915.1 billion, 0.6 percent (±2.1%) above the revised July estimate of $909.4 billion. The August figure is 7.1 percent (±2.3%) above the August 2012 estimate of $854.0 billion.
During the first 8 months of this year, construction spending amounted to $581.9 billion, 5.9 percent (±1.5%) above the $549.4 billion for the same period in 2012.

PRIVATE CONSTRUCTION Spending on private construction was at a seasonally adjusted annual rate of $640.5 billion, 0.7 percent (±1.2%) above the revised July estimate of $636.1 billion. Residential construction was at a seasonally adjusted annual rate of $340.2 billion in August, 1.2 percent (±1.3%) above the revised July estimate of $336.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $300.3 billion in August, 0.1 percent (±1.2%) above the revised July estimate of $299.9 billion.

PUBLIC CONSTRUCTION In August, the estimated seasonally adjusted annual rate of public construction spending was $274.5 billion, 0.4 percent (±3.3%) above the revised July estimate of $273.4 billion. Educational construction was at a seasonally adjusted annual rate of $63.8 billion, 1.3 percent (±5.9%) below the revised July estimate of $64.6 billion. Highway construction was at a seasonally adjusted annual rate of $80.6 billion, 0.1 percent (±7.4%) above the revised July estimate of $80.5 billion.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

State equalized property values rise

State equalized property values rise in Metro Detroit
detroitnews.com  by Gary Heinlein

Metro Detroit’s seven-county area experienced its first increase in state equalized value of properties in six years, according to a report released Monday — a small but lagging sign that the region’s economy continues to recover.

SEV — or half of the market value a city assessor assigns to property — increased 0.2 percent this year, the Southeast Michigan Council of Governments said. It’s another sign that the region’s economy is improving, the group said.

“The growth of total SEV is definitely good news for a region that suffered a great deal in the recent collapse of the real estate market,” SEMCOG Executive Director Paul Tait said in a statement.

By contrast, property taxable value — the main tax base for municipal governments — fell 0.2 percent, according to SEMCOG. About 60 percent, or 141 communities in Southeast Michigan, experienced gains in property taxable value this year, the group said.

“The trend local governments have faced for several years of declining local property taxes appears to be over,” Tait said. “Local governments must, however, continue their efforts to make the most efficient use of tax dollars to deliver the highest possible quality services to residents.”

David Sowerby, portfolio manager at Loomis Sayles investment management firm in Bloomfield Hills, said even a small increases in real estate values is good news for the region.

“It is interesting SEMCOG is seeing an increase in SEV for Metro Detroit,” Sowerby said. “But it certainly has been at least a one-year-plus experience that real estate values have been leading the economic recovery in Metro Detroit.

“There are lagging indicators — and there are lagging, lagging, lagging indicators, and SEV is one of those,” Sowerby explained.

The SEV rise “bodes well” for the future for collection of property taxes, but that won't necessarily be felt immediately, he said, and maybe not for at least another year.

The number of communities losing more than 10 percent of taxable value declined to six this year, down from 24 last year. More significantly, 141 communities gaining value is up from 27 communities that do so last year.

Improvement in taxable value was uneven.

Oakland County’s Lyon Township Oakland led with a 5.2-percent increase, while Monroe County’s Luna Pier saw a 16-percent SEV drop.

Pontiac lost 15 percent. Other older communities also experienced significant losses, officials said.

detroitnews.com  by Gary Heinlein

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Michigan monthly market report - July 2013

Michigan Monthly Market Report - July 2013   

Buyer demand in June continued at a strong pace in terms of new purchase contracts written (pending sales). June also continued the trend of more sellers putting their homes on the market, which should “in theory” relieve some of the significant inventory shortages. We say “in theory” because although new listings did rise, so did buyer demand, quickly absorbing the additional homes. In spite of more homes coming on the market, the available inventory continues to fall, reaching a new low for Southeast Michigan of 2.1 months (1.5 months for homes on the market less than 90 days). As we have shown over the last few months, the rate of growth for both new sales and listings continue their upward movement resulting in fewer days on market.

Enlarged View: Annual Appreciation Graph 

It is not surprising that the home value trend continues to accelerate, as well.

Enlarged View: Price per Square Foot Graph 

Interest rates were the biggest news in the past 30 days, rising in anticipation of the federal government rolling back their support of low mortgage rates. Showing appointments slowed a bit in June, which might indicate a reaction to the rising rates. So how high will rates move? Since jumbo mortgage loans (loans over $417,000) do not have a federal subsidy, they are the best gage of where interest rates should move. Right now both conventional and jumbo rates are nearly identical, meaning they have moved to their true market level and we can expect them to remain stable in the short run. However, as the economy continues to improve, rates will rise.

What is the “cost” of waiting in the current market?  For buyers the math is pretty easy. If values go up 10% and interest rates rise 1%, their buying power is reduced by 20% (i.e mortgage payments increase 20%), which is of course why so many buyers are attempting to buy now.  For Sellers, that 1% rise in rates will negate a 10% increase in value. Therefore, over the next few years rising rates will offset some of the rising appreciation, reducing buyer demand and limiting the amount of wild cash offers given to sellers.

Buyers should be aware that in more and more cases, sellers are requiring the buyer to commit to covering some or all of the short fall if the appraisal comes in lower than the agreed purchase price. Prices have not yet reached their 2005 peak levels so overbidding is still a safe bet to get the home you really want, even if the appraisal comes in lower. Appraisers have a very difficult time catching up with a rising market, since they rely on historical sales data to determine the value of a property.  

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Michigan home price rose 5.3% over last year

WASHINGTON — A survey shows U.S. home prices rose 10.5% in March compared with a year ago, the biggest gain since March 2006.

Core Logic, a real estate date provider, said annual home prices have now increased for 13 straight months. Prices are rising in part because more buyers are bidding on a limited supply of homes for sale.

Prices increased in 46 states over the past year — 11 of them posting double-digit gains. And when excluding distressed sales, prices rose in every state. Michigan prices rose 5.3%.

Nevada led all states with a 22.2% annual gain. It was followed by California (17.2%), Arizona (16.8%), Idaho (14.5%) and Oregon (14.3%).

Michigan home prices are still 39% below the peak reached in November 2005, the third largest drop in the country behind Nevada and Florida.

Home prices also rose 1.9% in March from February, signaling a solid start to the spring buying season.

Reprinted from the Detroit Free Press, 5-7-13

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.