Liem Ngo v. Department of Treasury

Summary

The Michigan Supreme Court held that the State Real Estate Transfer Tax Act exemption for a principal residence applies when the property's state equalized value at conveyance is no greater than its value at acquisition and the property was sold in an arm's-length transaction for fair market value. The Court rejected the Court of Appeals' interpretation requiring the sale price to equal exactly twice the property's state equalized value, reversed, and remanded the consolidated cases to the Tax Tribunal.

Holdings

1. A taxpayer qualifies for the MCL 207.526(u) real estate transfer tax exemption by showing that the property was the seller's principal residence, that its SEV at conveyance was equal to or less than its SEV at acquisition, and that the property was sold for its true cash value in an arm's-length transaction. The statute does not require the sale price to equal exactly twice the property's SEV.
2. The petitioners were entitled to refunds because each satisfied the statutory exemption requirements and the sales were arm's-length transactions for true cash value.

Questions Presented

1. Whether MCL 207.526(u) requires a principal residence to be sold for exactly twice its state equalized value in order to qualify for the real estate transfer tax exemption.
2. Whether "true cash value" in the penalty clause of MCL 207.526(u) means precisely twice the property's SEV or instead means fair market value determined by an arm's-length transaction.
3. Whether the petitioners were entitled to refunds of the real estate transfer tax they paid.

Disposition

reversed_and_remanded