[MI] Do I have to pay real estate tax if I assume title in a divorce?
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It's common for both spouses to remain responsible for mortgage/taxes during the interim period per their agreement, then once one spouse vacates and the quitclaim deed is recorded, the other becomes the owner of record and solely responsible for ongoing property taxes (MCL 565.29). The $40,000 payment is part of the property division and generally isn’t a separate real estate tax event in this divorce context.
So, you likely won’t owe a special real estate tax just because the property is transferred to you in the divorce. Your ongoing tax obligation will follow ownership: shared while both are responsible, then solely yours after the deed is transferred.
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I am trying to ascertain if I am going to be required to pay real estate tax when my spouse and I are divorcing. I refinanced the mortgage to be in my name only. In our mediation agreement, he would receive $40,000 and sign a quitclaim deed to remove himself from the title.
I understand this situation can be stressful. Have you already consulted with a real estate lawyer regarding your refinancing and the mediation agreement?
No. Just consulted mediation.
Have you reviewed the terms of the mediation agreement with a legal professional to ensure they protect your interests?
No.
Is there anything else the real estate lawyer should know before I connect you? Rest assured they’ll be able to help with your real estate tax question.
No.
Hello! My name is TJ and I’m an attorney. Generally, when a spouse transfers their interest in the marital home to the other spouse as part of a divorce, it's considered a transfer incident to divorce and is not a taxable event for real estate tax purposes. That means you would typically not owe a tax on the transfer itself for the $40,000 payment/quitclaim deed. However, exact rules can vary by jurisdiction.
- What state are you located in?
- Did you or your spouse receive any other assets or debts as part of the mediation agreement?
- Are there any other agreements or orders from the court regarding the property?
Michigan. No to both the last two questions.
Thanks — since the mediation agreement covers the house and the $40,000 payment, did the agreement specify who would be responsible for the real estate taxes on the home for the period leading up to the transfer?
We are splitting the mortgage and taxes on the home until he purchases a new home and vacates the property that is in the agreement. After that, I would be solely responsible for the mortgage and taxes.
It's common for both spouses to remain responsible for mortgage/taxes during the interim period per their agreement, then once one spouse vacates and the quitclaim deed is recorded, the other becomes the owner of record and solely responsible for ongoing property taxes (MCL 565.29). The $40,000 payment is part of the property division and generally isn’t a separate real estate tax event in this divorce context.
So, you likely won’t owe a special real estate tax just because the property is transferred to you in the divorce. Your ongoing tax obligation will follow ownership: shared while both are responsible, then solely yours after the deed is transferred.
Yes this absolutely makes sense. I really appreciate the thorough response.
You’re very welcome! I’m happy I could help.
