STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5919

June 11, 1981

TAXATION:

Documentary stamp tax--computation of tax on transfer of interest in real property

WORDS AND PHRASES:

'Total value'

The amount of the documentary stamp tax upon the transfer of an interest in real property is computed at the rate of $5.55 for each $500.00 or fraction thereof of the purchase price of the property, including the amount of any outstanding encumbrances assumed by the grantee.

Mr. Scott T. Beatty

Prosecuting Attorney

Charlevoix County

County Building

Charlevoix, Michigan

You have requested my opinion on the following tax matter:

Prior to the enactment of 1966 PA 134; MCLA 207.501 et seq; MSA 7.456(1) et seq, a tax on the conveyance of real property was assessed by the federal government pursuant to 72 Stat 1299 (1954), 26 USC 4361, which measured the transfer tax by 'the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale. . . .' The tax upon written instruments transferring an interest in real estate, as set forth in federal legislation, expired on December 31, 1967, 79 Stat 148 (1965), and was replaced by state legislation, 1966 PA 134, supra, Sec. 2, which imposes a tax upon written instruments transferring ownership of any interest in real estate located within the state at the time the instrument is recorded.

As originally enacted by the Legislature, 1966 PA 134, Sec. 4, supra, provided:

The Legislature amended 1966 PA 134, Sec. 4, supra, by means of 1968 PA 327 to read:

Thus, the Legislature modified 1966 PA 134, Sec. 4, supra, to require the tax to be imposed upon total value of the real property being transferred reflected by the market price agreed upon by the seller and purchaser, including any outstanding encumbrances assumed by the grantee under agreement with the grantor, rather than the consideration being paid by the purchaser of the property.

1968 PA 327 also amended 1966 PA 134, supra, Sec. 2 to add a subsection (c) to define the term 'value' as used in the act to mean 'the current or fair market worth in terms of legal monetary exchange at the time of the transfer.'

By adoption of amendatory 1968 PA 327, the Legislature intended to change the existing law. Bonifas-Gorman Lumber Co v Unemployment Compensation Commission, 313 Mich 363; 21 NW2d 163 (1946). It is impossible to read the terms 'total value' as 'consideration paid' by the grantee as an attempt to make plain what the Legislature had intended in its original enactment. Detroit Edison Co v Janosz, 350 Mich 606; 87 NW2d 126 (1957). The 'total value' of the real property must be read as the purchase price agreed upon by the grantee and the grantor, including any encumbrances assumed by the grantee.

It is, therefore, my opinion that the transfer tax is computed upon the total amount of the purchase price agreed to be paid by the grantee, including any cash consideration and the amount of the mortgage assumed.

Frank J. Kelley