Real Estate Investors & Developers Bookkeeping in Michigan

Beyond sales tax, Michigan entities have their own obligations — registration with the Michigan Department of Licensing and Regulatory Affairs, and whatever annual entity-level tax or report the state imposes. No local sales tax, and sales and use tax are reported on a combined return with withholding. These are recorded as they accrue rather than discovered at year end.

Michigan levies a real estate transfer or deed tax at closing, on top of recording fees and title charges. Each of those gets a different treatment — some capitalize into basis, some are deductible now — and drawing that line inconsistently across years is the single most common problem we find in investor books. Getting it right at closing is far cheaper than reconstructing it later.

The Michigan statewide base rate is 6%. Local rates stack on top and are generally sourced to the delivery address, so the effective rate varies within the state. Getting sourcing right is what keeps the liability account matching what you actually collected.

Registering to do business in Michigan runs through the Michigan Department of Licensing and Regulatory Affairs, with tax accounts through the Michigan Department of Treasury and employer accounts through the Michigan Unemployment Insurance Agency. Michigan treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.