Michigan License Law Practice Test

How is the state transfer tax calculated on a home sold for $375,000?

1. $1,000

2. $1,500

3. $2,812.50

4. $3,750

The correct answer is: $2,812.50

The state transfer tax in Michigan is calculated based on the sale price of the property, typically using a formula set by the state. For the purpose of residential real estate transactions, the transfer tax is usually assessed at a rate of $3.75 per $500 of the sale price. In this case, to determine the transfer tax for a home sold for $375,000, first convert the sale price into the appropriate units for tax assessment. Since the tax applies to every $500 increment, you would divide the sale price by $500: $375,000 ÷ $500 = 750. Next, you would multiply the result by the tax rate of $3.75: 750 × $3.75 = $2,812.50. Thus, the calculated state transfer tax for a home sold at this price is $2,812.50, making this the correct answer.