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Rental property LLCs in Michigan

Yes, you can hold a Michigan rental in an LLC. You file Articles of Organization with the Department of Licensing and Regulatory Affairs (LARA) for $50, and the LLC files a $25 annual statement by February 15 every year. The Michigan catch is property tax: a deed to your LLC can count as a "transfer of ownership" that resets your capped taxable value, and an LLC can't claim the principal residence exemption. Rental certificates are city by city, and in Detroit and Ann Arbor a new owner has to register again. Forming the LLC doesn't move your deed, and it doesn't stop a lender's due-on-sale clause.

Last checked 2026-10-24. General information, not legal or tax advice.

Local rental rules come first

Detroit. Under an ordinance the City Council passed in October 2024, an owner registers each rental in the city's eLAPs Code Enforcement module, passes a 15-point property condition inspection and receives a Certificate of Compliance; registering alone doesn't bring a property into compliance (BSEED Rental Certificate of Compliance page). A city summary from August 2025 lists inspection fees of $195 for a one-unit property and $225 for a duplex, and says the first certificate lasts 3 years and the second, if renewed before it expires, 5. Rental registration "remains valid permanently, unless there is a change in ownership," and when rental property is sold or transferred the new owner "must register and apply for a new rental registration certificate" (BSEED pages; Detroit City Code § 8-15-81), so a deed to your LLC means the LLC registers in its own name. Failing to register is a blight violation (City Code § 8-15-36). For short-term rentals, a June 24, 2025 memo from the City Council's Legislative Policy Division says Zoning Code § 50-12-492(d) bars using a dwelling for paid overnight guests as a home occupation and that "currently short-term rentals in the City are prohibited"; the city held an October 8, 2025 forum on a proposed ordinance. I found no adopted short-term rental ordinance, so ask BSEED before you list.

Grand Rapids. A rental occupied by someone other than the owner needs a Certificate of Compliance "before someone can live there"; certificates run two, four or six years depending on the property, with a reminder 90 days before recertification is due (city Rental Certification Program page). The fee schedule effective July 1, 2026 lists registration of a rental property at $0 per building and a certificate issued before expiration at $210 per building plus $80 per unit and/or $30 per room, and a $380 fee for a unit occupied without a certificate (city Housing and Zoning Fee Schedule). I couldn't find a city page on whether a certificate carries over to a new owner, so ask Code Compliance when you deed. The city "does not permit whole house short-term rentals"; its framework lets an owner-occupied dwelling rent one room with a license, and the checklist says the applicant must hold "Sole Ownership," "Joint Tenant by the Entireties" or "Joint Tenant" in a dwelling that is the owner-operator's principal residence (city Q&A, April 2024; One-Room Rental Checklist). An LLC isn't on that list.

Ann Arbor. City code § 8:516(4) says "No person shall lease or otherwise make a dwelling or rooming unit available for occupancy if a Certificate of Compliance is not in effect for the unit," and Rental Housing Services inspects every rental unit every 30 months (city Rental Housing page). The license is "not transferable" if the property is sold: new owners "must register and apply for a new license," though the inspection fee is waived if the license was current at the transfer (city registration page). An owner who doesn't live or have an office within 25 miles must choose a local agent. The fee schedule effective July 1, 2025 lists $175 per unit for the initial inspection of a 1- or 2-family dwelling. Short-term rentals (30 days or less) need their own license at $500 per unit per year; only principal-residence properties may apply in residential zones, and the fee schedule says non-owner-occupied short-term rentals are permitted only in commercial or mixed zoning areas and owner-occupied ones "Must be 100% PRE," the principal residence exemption an LLC can't hold (see below). On July 20, 2026, City Council passed Resolution R-26-301, "to Direct the City Attorney to Prepare a Moratorium on Short-term Rentals," so check its status before you apply (Legistar File 26-1231).

Elsewhere in Michigan. Rental rules are local. Ask your city or township before the first lease, and see the lodging use tax below if you rent short-term.

What the LLC protects, and what it doesn't

Michigan's LLC Act says: "Unless otherwise provided by law or in an operating agreement, a person that is a member or manager, or both, of a limited liability company is not liable for the acts, debts, or obligations of the limited liability company." (MCL 450.4501(4)). The operating agreement can change that, so read yours.

  • Guarantees still bind you. A personal guarantee you sign for a lender is your own promise.
  • Your own acts are yours. The statute covers the company's acts, debts and obligations; ask a Michigan attorney about your own negligence.
  • A personal creditor reaches distributions, not the building. A member "has no interest in specific limited liability company property" (MCL 450.4504(2)), and a creditor with a judgment against you personally can get a charging order, which entitles it "to receive only any distribution or distributions" and can't be foreclosed (MCL 450.4507(2), (5), (6)). Ask a Michigan attorney how that works for a single-member LLC.
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others, at $50 plus $25 a year and a registered agent each. Michigan has no series-LLC option that I could find: the word "series" appears in the Michigan LLC Act (1993 PA 23) only in an unrelated phrase ("series of actions"), checked in the Legislature's current PDF of the Act. So separate properties means separate LLCs. More: Should you have a separate LLC for each rental property?. Other states: Indiana · Missouri · Tennessee · all state guides.

Form it where the property is, or register there

The simplest setup is a Michigan LLC for Michigan property. If you already have an LLC from another state, Michigan requires a foreign LLC to get a certificate of authority from LARA "before transacting business in this state" (MCL 450.5002), for $50, with a Michigan resident agent and registered office. The Act's list of activities that don't count as transacting business includes "Owning, without more, real or personal property" (MCL 450.5008(1)(i)), but the list isn't exclusive and doesn't mention leasing, so ask a Michigan attorney whether renting out your property counts before you rely on it. An unregistered foreign LLC can't maintain a lawsuit in a Michigan court until it registers, owes the fees it would have paid, and faces a civil penalty of $100 to $1,000 for each calendar month, capped at $10,000; each manager, member or authorized person who takes part faces a penalty of up to $10,000 (MCL 450.5007(1), (5), (6)). A missing certificate doesn't void its contracts or stop it from defending a suit, and a member isn't liable for the company's debts solely for that reason (MCL 450.5007(3), (8)). A registered foreign LLC files the same February 15 annual statement (MCL 450.4207(3)).

What it costs the state

  • Articles of Organization: $50 (LARA fee schedule; MCL 450.5101(1)(b))
  • Annual statement: $25, due each February 15 (LARA annual statements page; MCL 450.4207(3))
  • Scheduled change: the filing-fee statute sets the annual statement at $15 for a statement paid after September 30, 2027 (MCL 450.5101(1)(g))
  • Name reservation (optional): $25, holds the name until the end of the sixth full calendar month after the month you file (MCL 450.4205(1); LARA fee schedule)
  • Expedited filing (optional): $50 for 24 hours or $100 same day for formation documents, on top of the filing fee (LARA fee schedule)
  • Change of registered office or resident agent: $5 (MCL 450.5101(1)(i))
  • Certificate of restoration of good standing: $50 (MCL 450.5101(1)(h))
  • Foreign LLC certificate of authority: $50 (MCL 450.5101(1)(n); LARA fee schedule)
  • Corporate Income Tax: only if the LLC is taxed as a corporation (Michigan Treasury)
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name that contains "limited liability company" or "L.L.C." or "L.C.," with or without periods (MCL 450.4204(1)), and that is distinguishable from names on LARA's records (§ 450.4204(3)(c)). Reserve it first if you want to hold it.
  2. Name a Michigan resident agent and registered office: an individual who lives in Michigan, or a corporation or LLC authorized here, with a business office at the registered office (MCL 450.4207(1)).
  3. File Articles of Organization with LARA's Corporations Division ($50; the fee schedule lists online filing). They state the LLC's name, its purposes, the registered office address, the resident agent and whether managers run the business (MCL 450.4203). The LLC exists on the articles' effective date (MCL 450.4202(2)). The LLC Act has no newspaper-notice step for forming an LLC; its only publication provision is the optional notice of dissolution.
  4. Write an operating agreement. The Act defines it as "a written agreement" (MCL 450.4102(2)(r)).
  5. Get an EIN and open the LLC's bank account.
  6. Put the LLC's name and an address for notices in every lease; a landlord who takes a security deposit must give the tenant that in writing within 14 days after possession (MCL 554.603).
  7. Register or certify each rental with the city (above).

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed, recorded with the county register of deeds. An unrecorded conveyance "shall be void as against any subsequent purchaser in good faith and for a valuable consideration" whose conveyance is first recorded (MCL 565.29).

  • Put the LLC's address in the deed. A register of deeds may not receive a deed for recording unless the address of each grantee is printed on it (MCL 565.201(1)(d)). Recording is $30 per document, however many pages (MCL 600.2567(1)(a)).
  • State and county transfer tax may apply. The state tax is $3.75 for each $500 or fraction of the property's value (MCL 207.525(1)), and the county tax is 55 cents per $500 in a county under 2,000,000 people, up to 75 cents in a county with 2,000,000 or more (MCL 207.504), so $4.30 per $500 in total in a county under 2,000,000. The seller or grantor is liable for the state tax (MCL 207.523(2)). A deed subject to it can't be recorded until the stamps are bought, and a deed that isn't subject must "state on its face the reason for the exemption" (MCL 207.533(1)).
  • Whether a deed to your own LLC is taxed turns on "consideration." The state tax reaches deeds "for consideration" (MCL 207.523(1)(b)), and both acts exempt an instrument whose consideration is under $100 (MCL 207.526(a), 207.505(a)). Treasury's FAQ says a purchaser's assumption of a land contract or agreement to pay off a mortgage counts as consideration, so a mortgaged rental may not fit that exemption. The state act also exempts "a transfer between any limited liability company and its members" if the interests are held "by the same persons and in the same proportion" (MCL 207.526(p)(ii)); a 2020 Treasury technical advice letter, about a deed between two sister LLCs, read that strictly: "the transfer must be between LLC A and its member." Treasury refunds state tax paid on an exempt transfer on Form 2796, filed within four years and 15 days. Ask your attorney and the register of deeds before you sign.
  • Tenants and deposits. A deed to your LLC ends your own interest as landlord. A landlord whose interest ends "by sale, assignment, death, appointment of receiver or otherwise" stays liable for the security deposit until it is transferred to the successor and the tenant is told by ordinary mail of the transfer and the successor's name and address (MCL 554.614).

Have a Michigan attorney prepare the deed.

Property tax: your deed can reset your taxable value

Michigan assesses property at 50% of true cash value, but each year's taxable value is the lesser of the state equalized valuation and last year's taxable value raised by the lesser of 5% or inflation, adjusted for additions and losses (MCL 211.27a(1)-(2)). After a "transfer of ownership," the next year's taxable value becomes the full state equalized valuation (§ 27a(3)). A conveyance by deed is a transfer of ownership (§ 27a(6)(a)), and the exclusions in § 27a(7) don't name a deed from you to your own LLC. The State Tax Commission's Transfer of Ownership Guidelines (revised February 25, 2025) fill the gap:

  • A rental deeded to an LLC with the same owners and control. If there is a business purpose, the Commission treats "initial transfers by individuals of a fee simple interest" to an LLC as transfers between commonly controlled entities, "not transfers of ownership," when the owners' interests and control in the LLC are "identical" to what each had in the property. Ask your assessor whether your rental meets that business-purpose test; assessors decide.
  • A home you live in. The Commission's example of a couple who deed their personal residence to an LLC says the common-control rule can't apply "since no business activity exists in this situation." A transfer from one spouse to an LLC whose only member is the other spouse "is not a transfer between spouses and a transfer of ownership applies."
  • Selling LLC interests later. Conveying more than 50% of the interests in an LLC, counted cumulatively since the last transfer of ownership, is generally a transfer of ownership of its real property, and the LLC must notify the assessor within 45 days (MCL 211.27a(6)(h); guidelines).
  • File the Property Transfer Affidavit (Form 2766) within 45 days. The new owner files it with the assessor for the city or township, and the form calls filing "mandatory" whenever real estate is transferred, "even if you are not recording a deed." The Commission says the law requires it for a transfer of ownership but encourages filing even when you think none occurred, so the assessor doesn't uncap by mistake. If the new owner doesn't notify, the taxable value is adjusted and back taxes, interest and a late penalty follow: $5 a day after the 45 days, up to $4,000 ($200 for a principal residence; commercial and industrial property has different caps) (MCL 211.27a(10), 211.27b(1)).
  • The principal residence exemption doesn't pass to an LLC. It exempts an owner's principal residence from the local school operating millage, up to 18 mills (Treasury). Treasury's guidelines say "LLCs and corporations are not owners that are eligible for the principal residence exemption," with narrow exceptions, and neither is a sole member, whose interest is personal property; for the exemption statute a "person" means "an individual" (MCL 211.7dd(b)). Treasury's example says an owner "lost eligibility when he transferred the property to the LLC." Rescind the exemption on the state's form, filed with the local tax collecting unit, not more than 90 days after the property stops being your principal residence (MCL 211.7cc(5)).

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). Michigan's Corporate Income Tax is a 6% tax on "C corporations and taxpayers taxed as corporations federally," so it applies to an LLC taxed as a corporation; the flow-through entity tax applies only to entities that elect it (Treasury). Property tax is covered above.

  • City income tax. "Twenty-four Michigan cities levy municipality taxes related to income," including Detroit, Grand Rapids and Lansing, and each city except Detroit runs its own (Treasury city tax page). Ask a CPA whether your rental income is taxed locally.
  • Short-term rentals may owe use tax on lodging. Treasury says use tax at six percent is due on "rooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations that are available to the public on the basis of a commercial and business enterprise," and none is due if a room is rented "for a continuous period of more than one month to the same tenant." Ask Treasury whether your listing counts.

Keeping each LLC in good standing

  • File the annual statement with LARA by February 15 each year ($25 now). An LLC formed after September 30 skips the next February 15. Online filing opens October 15 (MCL 450.4207(3); LARA annual statements page).
  • If statements go unfiled for 2 consecutive years, LARA sends notice, and if the missing statements and fees aren't filed within 60 days the LLC is "not in good standing": no certificate of good standing, its name "available for use by another entity," and LARA accepts nothing but a certificate of restoration of good standing. The statute adds that the LLC "remains in existence and may continue to transact business" (MCL 450.4207a(2)-(4)).
  • Keep the resident agent and registered office current; if the LLC has no agent or the agent can't be found, service can be made on LARA (MCL 450.4207(1), (4)).
  • Tell the assessor within 45 days if more than 50% of the LLC's interests change hands (above).
  • Renew city certificates on their own clocks: Detroit's first lasts 3 years, then 5; Grand Rapids' last 2, 4 or 6 years; Ann Arbor re-inspects every 30 months and licenses short-term rentals yearly.

Before you file or transfer a property

  • Attorney: the deed, the transfer tax claim, security deposits, separate LLCs
  • Servicer: is the transfer allowed?
  • Insurance agent: named insured, coverage
  • Assessor: transfer of ownership, Form 2766, principal residence exemption
  • CPA: income tax, city income tax, lodging use tax
  • City: rental registration or certificate in the LLC's name; short-term rental license
  • Calendar: February 15 each year; 45 days after a transfer; 90 days to rescind a principal residence exemption

Form it with Corpus

Corpus prepares and files your Articles of Organization and includes the first year of registered-agent service. The Michigan page shows the current price. Corpus isn't a law firm: the deed, the loan, taxes and city certificates are separate steps.

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Sources

Last checked 2026-10-24. Corpus is not a law firm and does not provide legal or tax advice.