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Property Tax: The average property tax in Michigan is 1.64% of the total sale price of the property. Capital Gains Tax: The IRS (Internal Revenue Service) authority levies the capital gains tax on a stepped-up basis. So, this tax would only apply to the propertys appreciation after it was inherited.
Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
Form MI-706,Michigan Estate Tax Return. This return is for estates of persons who were Michigan residents and whose real or tangible personal property is located only in Michigan.
Estate Tax for Michigan Estates Some individual states have state estate tax laws, but Michigan does not. However, federal estate tax laws do apply to Michigan estates. Federal estate tax law includes a lifetime transfer exemption, which excludes the exempted amount from transfer taxes including estate taxes.

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At the state level, Michigan has never imposed a gift tax, and no longer imposes an estate tax or inheritance tax (except for Michigan residents dying before October 1, 1993).
Like the majority of states, Michigan does not have an inheritance tax. If you stand to inherit money in Michigan, you should still make sure to check the laws in the state where the person you are inheriting from lives.
How Can I Avoid Capital Gains Tax on Inherited Property? Make the Inherited Property Your Primary Residence. Sell the Inherited Property Immediately. Rent Out the Inherited Property. Disclaim the Inherited Property. Deduct Closing Costs from the Capital Gains.

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