Buying Before You Sell in Michigan

The Michigan part of buying before you sell

Owning two Michigan homes for a few weeks or months raises a few state-specific questions about property taxes, transfer tax and disclosures. Here's what the law and the Michigan Department of Treasury say.

1. Keep the homestead exemption on the old home while it’s for sale

   Owning two Michigan homes for a while doesn’t have to cost you the homestead (principal residence) exemption on the old one. With Treasury Form 4640 you can keep it for up to three years while the old home is for sale, not occupied, not leased and not used for business, once you have established your new Michigan principal residence. File by June 1 or November 1 of the first year and again each year by December 31.

   Source: Michigan Treasury, Conditional Rescission of the Principal Residence Exemption (checked 2026-10-17)

2. Budget for higher taxes on the new home

   Buying a Michigan home uncaps its taxable value: the year after the sale it resets to the state equalized value, so the new home’s property taxes can be noticeably higher than the seller paid.

   Sources: Michigan Treasury, Transfer of Ownership (checked 2026-10-17); MCL 211.27a(3) (checked 2026-10-17)

3. Plan for transfer tax when the old home sells

   When you sell, Michigan’s state real estate transfer tax is $3.75 for each $500 of value and the county tax is 55 cents for each $500 in counties under two million people (up to 75 cents in larger ones), and the seller pays both by law.

   Sources: MCL 207.525 (State Real Estate Transfer Tax Act) (checked 2026-10-17); MCL 207.504 (county real estate transfer tax) (checked 2026-10-17); MCL 207.523 (seller is liable for the state tax) (checked 2026-10-17); MCL 207.502 (seller is liable for the county tax) (checked 2026-10-17)

4. Check whether you’re exempt from the state transfer tax

   Many sellers of a principal residence are exempt from the state portion of the transfer tax when the home’s state equalized value at the sale is equal to or less than it was when they bought it, and the sale is at arm’s length. The county portion has no such exemption.

   Source: MCL 207.526(u) (principal residence exemption) (checked 2026-10-17)

5. Have your Seller Disclosure Statement ready

   Selling a one-to-four-unit home in Michigan generally requires a Seller Disclosure Statement delivered before you sign a binding purchase agreement; if it arrives late, the buyer can cancel within 72 hours of in-person delivery or 120 hours by registered mail.

   Sources: MCL 565.952 (Seller Disclosure Act scope) (checked 2026-10-17); MCL 565.954 (Seller Disclosure Act) (checked 2026-10-17)

6. Check whether MSHDA works for a repeat buyer

   MSHDA’s MI Home Loan is for first-time buyers (no home owned in the past three years) statewide and repeat buyers only in targeted areas. Outside targeted areas, anyone who has owned a principal residence in the last three years is not eligible. If you own a home now, have a participating lender check the new home’s address and your situation before you count on MSHDA.

   Sources: MSHDA, MI Home Loan (checked 2026-10-17); MSHDA Targeted Areas flyer (2024-05-01)

This is general information, not tax or legal advice. Ask your tax preparer or attorney how these rules apply to you.