Whenever real property ownership is transferred from Person(s) A to Person(s) B, a Property Transfer Affidavit (L-4260) must be completed and filed with the local assessor. If this is not done, when the local assessor learns of the ownership transfer, s/he will complete the Assessor Affidavit Regarding "Uncapping" of Taxable Value (L-4054) for the appropriate tax years. "Uncapping" means that the SEV (State Equalized Valuation) becomes the Taxable Value, and additional property taxes become due immediately. The additional property taxes due can be for multiple tax years and can also be a substantial amount of money, so it is to the advantage of the purchaser to file the Property Transfer Affidavit as soon as possible after the transfer of property ownership.
In addition to the filing of the Property Transfer Affidavit (L-4260), whenever real property ownership is transferred from Person(s) A to Person(s) B, and the purchaser is planning to both own and occupy the property as his/her primary residence, the purchaser must file a Homestead Affidavit (2368) on or before May 1 of the effective tax year in order to receive the homestead credit. [The principal residence credit is an exemption from paying Local School Operating taxes (18 mills), which are levied on the Summer Tax Bill.] The seller is required to complete a Request to Rescind/Withdraw Principal Residence Exemption (2602), and their homestead credit will be removed on December 31 of the calendar year in which the property was sold.
It is important that, at all property closings, all three forms are completed and filed with the local assessor and/or treasurer's office in order to avoid problems related to "uncapping" taxable values and homestead exemption qualification. At property closings involving properties that have not qualified and/or will not qualify for the homestead exemption, the Homestead Affidavit and the Request to Rescind/Withdraw Principal Residence Exemption are not required.
The following property transfer forms as well as other useful forms can be found at the State of Michigan Treasury Department web site.
L-4260 Property Transfer Affidavit
2368 Affidavit for Homestead Exemption (formerly T-1056)
2602 Request to Rescind/Withdraw a Principal Residence Exemption (formerly T-1067)