Michigan puts two transfer taxes on the same deed, and only one of them has an exemption that fits your LLC

The Michigan Exemption, and the Conditions That Void It

Michigan runs two transfer taxes off two different acts with two different exemption lists, and reading one list tells you nothing about the other. The state tax sits at MCL 207.525; the county tax sits at MCL 207.504. The provision landlords are looking for is in the state act only.

MCL 207.526(p)(ii) exempts "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." Read the condition rather than the headline: it is proportional identity of ownership before and after. A deed into an LLC whose membership is being rearranged in the same transaction (a spouse added, a partner brought in, an interest sold on the same day), does not sit inside that sentence.

The county side has no LLC clause to fail. Macomb County's Register of Deeds sets the two lists out separately under the headings "State transfer tax exemptions to Real Estate Transfer Tax" and "County Transfer Tax Exemption to Real Estate Transfer Tax", and the limited liability company clause appears only under the state heading. What a landlord is left with on the county side is the general one, MCL 207.505(a): "Instruments where the value of the consideration is less than $100.00." MCL 207.526(a) is worded identically on the state side. That turns the whole county question into what "consideration" means when the LLC takes the property subject to an existing mortgage, and that is precisely the question we could not answer from a primary source.

Every michigan.gov Treasury URL returned HTTP 403 to us, including the technical advice letter "SRETT Exemption on Transfer of Interests in Real Property", the 2015 SRETT FAQ and Form 2796. We are not going to guess it. Note that the state base is measured differently and does not raise the same problem: MCL 207.522 defines "value" as "the current or fair market worth in terms of legal monetary exchange at the time of the transfer", so a mortgage does not enter the state computation at all.

Mechanically, this is not something you apply for. The exemption is claimed by stating it on the face of the deed, which means the citation has to be right before the instrument is presented at the register of deeds for the county the property sits in. If tax was paid on a transfer that should not have carried it, Michigan's refund route runs through Form 2796, a form whose text we also could not retrieve, so ask Treasury what it currently requires rather than working from a copy found elsewhere.

One thing we could not settle from a primary source: whether Michigan treats a mortgage the LLC takes the property subject to as taxable consideration. Several states do, and it is what turns an apparently free transfer into a real bill. Ask the recording office or a Michigan attorney before you record, particularly if the property is financed.

Whatever the state does, counties and municipalities in Michigan can levy transfer tax of their own on the same deed. Whether a local exemption follows the state one varies, and it is not safe to assume either way. Check with the recorder for the county the property sits in before you assume the total.

Michigan also taxes transfers of a controlling interest in an entity that owns real property, which is aimed at the obvious workaround, selling the LLC rather than the building. How far it reaches varies: some states apply it to any realty-holding entity, others only above an ownership threshold or only to commercial property, so whether it touches a residential rental is a question for the state’s own rules rather than something to assume in either direction.

Authority: MCL 207.526(p)(ii) (state tax). The county act, MCL 207.505, has no counterpart.. legislature.mi.gov

Does the Transfer Reset Your Property Tax in Michigan?

This is the section to read twice, because it is the expensive one and it has nothing to do with either transfer tax. Michigan caps taxable value: MCL 211.27a(2) sets it at the lesser of last year's taxable value "multiplied by the lesser of 1.05 or the inflation rate, plus all additions" and the current state equalized valuation. The cap is what has kept your bill below the market for as long as you have held the property. MCL 211.27a(3) removes it: "Upon a transfer of ownership of property after 1994, the property's taxable value for the calendar year following the year of the transfer is the property's state equalized valuation for the calendar year following the transfer." And MCL 211.27a(6)(a) defines a transfer of ownership to include, in three words, "a conveyance by deed."

The exclusions in MCL 211.27a(7) run from paragraph (a) to paragraph (x), and none of them reaches an individual conveying to a limited liability company he or she owns. The closest is (7)(m): "A transfer of real property or other ownership interests among corporations, partnerships, limited liability companies, limited liability partnerships, or other legal entities if the entities involved are commonly controlled." It says "among", and it lists legal entities.

A natural person is not one of the entities on that list, so a personally held rental deeded into the owner's own company falls outside it. Paragraph (7)(k) is narrower still and no help here. It is limited to an "affiliated group", defined in the same paragraph as "1 or more corporations connected by stock ownership to a common parent corporation." Both paragraphs also carry a proof obligation: the State Tax Commission may demand proof within 45 days, and a failure to comply "is subject to a fine of $200.00."

What that means in the year after the deed is that taxable value jumps to state equalized valuation, which is roughly half of market value, and every year of accumulated cap benefit is gone permanently. The cap restarts from the new, higher number. That cost repeats every year you own the property, which is why it can outweigh both transfer taxes many times over on a property held for a decade. One limit on our reach worth stating: the State Tax Commission's Transfer of Ownership Guidelines PDF and michigan.gov/taxes/property/change-ownership both returned HTTP 403, so we could not put Treasury's own worked examples alongside the statute. The statutory text above was returned in full and is controlling.

Separately, and this catches people converting a former home into a rental: the benefits that turn on owning and occupying the property as your residence, a homestead exemption, an owner-occupancy credit, a residential assessment rate, are not things an LLC occupies a home to earn. Where the property still carries one, the deed puts it at risk, and the bill goes up whether or not the assessment itself moves. Which benefit is at stake, and on what terms, is a question for the assessor in the county the property sits in.

Authority: MCL 211.27a(3), (6)(a), (7)(m); MCL 211.7dd(b), legislature.mi.gov

Moving a Property You Already Own Into the LLC in Michigan

1. 1

   Price the uncapping before you price the deed

   Ask the local assessor what the parcel's state equalized valuation is and what its taxable value is. The gap between them is what the deed costs you in the first year and, because the cap restarts from the higher number, every year after. That figure usually settles the question long before either transfer tax does.

2. 2

   Check that ownership is identical on both sides

   MCL 207.526(p)(ii) is keyed to the ownership interests being held "by the same persons and in the same proportion". If the LLC's membership is going to differ from how the property is titled today (a spouse added, a partner brought in), that difference has to be resolved separately from the deed, not folded into it.

3. 3

   Decide what the deed will recite, and ask about the county side

   The county act has no LLC exemption, so the only county route is MCL 207.505(a), for instruments "where the value of the consideration is less than $100.00". Whether a mortgage the LLC takes subject to counts as consideration for that purpose is the thing Treasury's guidance would settle and we could not reach it. Put the question to the register of deeds and to Treasury before the instrument is drafted.

4. 4

   State the exemption on the face of the deed

   Michigan's exemptions are claimed on the instrument itself, not on a separate application. The statutory citation belongs on the deed before it's presented for recording. Getting it wrong is recoverable (Form 2796 is the refund route) but recovering is slower and less certain than getting it right the first time.

5. 5

   Record with the register of deeds for the property's county

   Recording is county business, and the county register administers the county tax as well as the recording. Keep the recorded instrument: it's what the assessor and, if it comes to it, the State Tax Commission will ask to see, and the Commission may demand proof within 45 days on the entity-transfer exclusions.

6. 6

   Deal with the Principal Residence Exemption if one is on the parcel

   If the property still carries a PRE from when you lived there, it cannot follow the property into the company. MCL 211.7dd defines "person" for the PRE in section 7cc as an individual, while the wider list that includes limited liability companies is used only for section 7ee. That is a definitional bar, so plan for the bill on the assumption the exemption ends.

One LLC Per Property, or One for the Portfolio?

Michigan has no series LLC statute, so separating properties means a separate LLC for each one.

The negative here is a hard one rather than a failure to find. We downloaded the Legislature's own complete PDF of the Michigan Limited Liability Company Act, Act 23 of 1993, all eleven articles, MCL 450.4101 through 450.5200, and searched the full text. The word "series" occurs exactly once in the entire act, in an unrelated phrase about "a significant action or series of actions". The article index confirms it: there is no series article, and no Michigan analogue to 6 Del. C. Section 18-215.

What makes the one-LLC-per-property question different in Michigan is that every extra entity means an extra deed, and in Michigan an extra deed is an extra transfer of ownership under MCL 211.27a(6)(a). Splitting four rentals across four companies is four uncappings, not one. There is no version of that where the second, third and fourth deeds are cheaper than the first. It also means the sequencing matters in a way it does not elsewhere: a property moved into a holding company now and shuffled into a per-property company in two years has been conveyed twice, and the second conveyance is another reset.

The state transfer tax exemption pushes the same way. Because MCL 207.526(p)(ii) is keyed to ownership being held "by the same persons and in the same proportion", a restructuring that changes who owns what, the usual reason people move to one entity per property in the first place, often to take a partner into a single deal, is the fact pattern the subsection was not written to cover. If a portfolio structure is going to change, the cheap moment to think about the deeds is before the first one is recorded.

Practically, that leaves the familiar trade-off. Separate LLCs mean separate filing fees, separate annual reports, separate registered agents and separate bank accounts, every year, for as long as you hold the properties. One LLC holding several properties means one set of costs and one pool of assets exposed to a claim arising at any of them. Which side of that you land on is a function of how much equity is in the portfolio, and it is worth pricing the recurring cost before deciding, our Michigan LLC cost breakdown has the per-entity figures.

What Creditors Can Reach, What the Michigan Statute Says

The reason to hold a rental in an LLC is usually to keep a claim arising at the property from reaching everything else you own. The reverse question matters just as much and gets far less attention: if someone wins a judgment against you personally, can they reach the rental inside the LLC? That is what a state’s charging-order provision decides.

Michigan's LLC act makes the charging order the exclusive remedy, but does not address the single-member case one way or the other.

MCL 450.4507 is headed "Charging membership interest with payment of judgment; rights of judgment creditor; rights and powers of member; charging order as lien on membership interest; section as exclusive remedy", and it runs the opposite way from the uniform-act states. Subsection (5): "A charging order is a lien on the membership interest of the member that is the subject of the charging order. However, a person may not foreclose on that lien or on the membership interest under this act or any other law, and the charging order is not an assignment of the member's membership interest for purposes of section 505(4)." That is an express statutory prohibition on foreclosure, not silence, and it is the reason a landlord reading a generic asset-protection page written around another state's act will find the Michigan position described backwards.

Subsection (6) does two things. It makes the charging order exclusive, "This section provides the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the member's membership interest in a limited liability company", and then it shuts a side door most acts leave open: "A court order to which a member may have been entitled that requires a limited liability company to take an action, provide an accounting, or answer an inquiry is not available to a judgment creditor of that member attempting to satisfy a judgment out of the member's membership interest, and a court may not issue an order to a judgment creditor." Subsection (2) confines the creditor to money that was going to be paid out anyway: the creditor "is entitled to receive only any distribution or distributions to which the judgment creditor is entitled with respect to the member's membership interest."

What the section does not do is say anything about how many members the company has. The words "single member" and "sole member" appear nowhere in it; it refers throughout to "a member". Michigan last amended the section in 2010, by Act 290. We read the section text and are reporting it; we did not survey Michigan case law and are not characterising how any court has applied it.

We are reporting what the section says, not what a court would do with your facts. Outcomes turn on how the LLC was capitalised, how it has been operated and what the creditor is owed, and none of that is something a page can assess. If the answer above is load-bearing for you, it is a question for a Michigan attorney.

Authority: MCL 450.4507, legislature.mi.gov

Three Problems No State Transfer Rule Solves

These land the same way in Michigan as everywhere else. One because it is federal law, two because they are contracts you signed. Which is exactly why they get left off state pages. They are also the three most likely to actually cost a landlord money, so they are here rather than buried.

The due-on-sale point is the one that generates the most bad advice. The Garn-St Germain Depository Institutions Act, at 12 U.S.C. § 1701j-3(d), bars a lender from enforcing a due-on-sale clause on nine categories of transfer of residential property of fewer than five dwelling units. The one people cite is the eighth: a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property. Neither that paragraph nor any of the other eight names a transfer to a limited liability company. The protection quoted for an LLC transfer is written for trusts, and the occupancy qualifier is the limb that matters most to a landlord, because a rental is occupied by someone else.

One honest caveat on that list. The ninth category is open-ended. It reaches any other transfer described in regulations issued under the Act, at 12 C.F.R. § 591.5(b), so it is a list that can be extended by regulation rather than a closed set fixed by the statute. We have not read those regulations end to end, and say so rather than describing the statute as more settled than we checked.

In practice lenders often do not call a loan when payments keep arriving, and that is genuinely what usually happens, but “usually not enforced” is a different thing from “not permitted,” and only one of them is a plan. The way to find out is to ask your servicer for written consent before you record, not after.

Which deed you use is a decision, not a formality. A quitclaim deed transfers whatever interest you happen to have and warrants nothing, which is why it is the cheap default for a transfer between yourself and your own company, and why title professionals warn against it. It can leave a gap in the chain of title that surfaces years later when you sell or refinance, and because it warrants nothing it gives the LLC no recourse against you if a defect turns up. A warranty deed carries the covenants across. Which one is appropriate depends on how the property was acquired and what your title history looks like, and it is a question worth asking before the deed is drafted rather than after it is recorded.

Tell your title insurer before you record. An owner’s title policy insures the person named in it. Convey the property to an LLC and the insured owner and the record owner are no longer the same. Which is the fact pattern in which coverage gets argued about at the worst possible moment, when a claim is already live. Some insurers will endorse an existing policy across to the entity, sometimes for a modest fee; some will not, and a new policy means a new premium on the current value. Either way it is a phone call before the deed rather than a discovery afterwards, and it belongs in the same budget as the tax above.

On the fourth thing people ask about: beneficial ownership reporting. Under 31 C.F.R. § 1010.380, a “reporting company” is an entity formed outside the United States and registered to do business in a State, and paragraph (c)(2)(xxiv) separately exempts any entity created by filing with a Secretary of State. A rental LLC you form in Michigan is therefore exempt and files no beneficial ownership report. Pages telling you to file within 30 days of formation are describing the rule as it stood before March 2025. The exception runs the other way: an LLC formed in another country and registered to do business in Michigan does still report. More on what compliance actually requires →

Does Michigan Make You Register the Rental?

Not at the state level. Michigan runs no statewide rental registry, so registration is a municipal question, and what a municipality may require varies, in some states a city can impose an annual licence with an inspection, and in others state law caps or forbids local registries outright. The LLC does not change the answer either way: the duty attaches to the rental unit, not to the form of the owner. Check with the city or county the property sits in.

Michigan's own housing statute is unusually explicit about pushing this down to city hall, and it is worth knowing the four provisions because they explain why nothing exists at the state level to file. MCL 125.401(2) limits the Housing Law of Michigan's reach: "This act applies to each city, village, and township that, according to the last regular or special federal census, has a population of 10,000 or more. However, this act does not apply to private dwellings and 2-family dwellings in any city, village, or township having a population of less than 100,000 unless the legislative body of the local governmental unit adopts the provisions by resolution passed by a majority vote of its members."

MCL 125.523 hands administration to the municipality, which "shall designate a local officer or agency which shall administer the provisions of the act". MCL 125.525 makes any registry optional and multi-unit: "The enforcing agency may maintain a registry of owners and premises regulated by this act", and where it does, the duty to register falls on "the owner of a multiple dwelling or rooming house". And MCL 125.402(2)(a) puts a single-family rental outside that category entirely, defining a "private dwelling" as "a dwelling occupied by but 1 family" while a "multiple dwelling" is "a dwelling occupied otherwise than as a private dwelling or 2 family dwelling". The occupancy certificate in MCL 125.529(1) is on the same footing. It applies to "[u]nits in multiple dwellings or rooming houses" and is issued locally. We looked at the agencies too: MSHDA's rental pages cover vouchers, housing choice voucher landlords, tax credit compliance and developer programmes, with no registration function, and LARA's Bureau of Construction Codes surfaced no landlord registration scheme.

legislature.mi.gov

If You Rent Short-Term in Michigan

A short-term let is a different tax animal from a twelve-month tenancy, and the LLC has nothing to do with it. The lodging tax follows the stay, not the owner.

Michigan reaches short-term lets through the Use Tax Act rather than the General Sales Tax Act, which is the detail most write-ups get wrong and which changes what you actually register for. MCL 205.93a(1)(b) brings into the use tax base "[r]ooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations that are available to the public on the basis of a commercial and business enterprise", and the definition is drawn wide enough to catch a house: it names "inns, motels, tourist homes, tourist houses or courts, lodging houses, rooming houses, nudist camps, apartment hotels, resort lodges and cabins ... and any other building or group of buildings in which accommodations are available to the public".

The transience line is a calendar test, not a day count. The same subdivision excepts accommodations "rented for a continuous period of more than 1 month". Which is why there is no day figure in the table above. Reporting thirty days would have been an invention.

The platform question has a carve-out the table cannot show. MCL 205.95c(1) requires a marketplace facilitator with nexus to "collect and remit the tax due under this act on all taxable sales made by the marketplace facilitator or facilitated for marketplace sellers", which is the default answer for a host with no registration of their own. But MCL 205.95c(11)(b)(iii) removes the platform from that status for lodging where the accommodations "are provided by a hotelkeeper, motel operator, or other person that is registered under section 5 or licensed under section 3 of the general sales tax act, 1933 PA 167, MCL 205.53." So an unregistered host is covered by the platform, and a host who holds a Michigan registration remits their own. Which of those you are is a consequence of your own filings, not of the listing.

On top of the state tax, some counties levy a separate accommodations excise, MCL 141.862(1), from 1974 PA 263, lets certain county boards "enact an ordinance to levy, assess, and collect an excise tax from all persons engaged in the business of providing rooms for dwelling, lodging, or sleeping purposes ... to transient guests". That is the enabling act we verified; Michigan has others in this area that we did not, so treat it as one local authority rather than the only one.

A platform collecting the state tax does not always cover every local tax on the same booking, and it never covers a booking taken directly. If you take reservations off-platform as well, that is where the exposure sits.

Authority: MCL 205.93a(1)(b); MCL 205.93(1), legislature.mi.gov

Who to Ask in Michigan

Three offices, and they don't talk to each other. The register of deeds for the county the property sits in records the instrument and administers the county transfer tax. Macomb County's is the one whose published exemption lists we checked, and its practice of printing the state and county lists under separate headings is the clearest illustration of the split anywhere. The local assessor is who handles the transfer of ownership and the uncapping, and that's the call worth making before you record rather than after, because it's where the money is.

The Michigan Department of Treasury administers the state real estate transfer tax and the Form 2796 refund route; we couldn't read any of Treasury's own SRETT material because every one of its URLs returned HTTP 403 to us, so this is a telephone question rather than a website question. For anything turning on whether a particular deed uncaps, a Michigan attorney is the right reader of MCL 211.27a(7) against your facts.

Forming the LLC Itself

Nothing about the formation process changes because the LLC will hold rental property, the articles, the registered agent requirement and the annual filing are the same as for any other Michigan LLC. The walkthrough lives in the formation guide rather than being repeated here.

How to start an LLC in Michigan →

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