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Homestead Property Tax Credit Information

Why is the amount of my credit different from what I expected?

Before calling or writing, we suggest you use the checklist that best fits your situation.

For Homeowners Checklist     For Renters Checklist

What is the Homestead Property Tax Credit?

Michigan's homestead property tax credit is how the State of Michigan can help you pay some of your property taxes if you are a qualified Michigan homeowner or renter and meet the requirements. You should complete the Homestead Property Tax Credit Claim form (MI-1040CR) to see if you qualify for the credit.

The credit, for most people, is based on a comparison between property taxes and total household resources. Homeowners pay property taxes directly and renters pay them indirectly with their rent.

Given that each taxpayer has unique circumstances that determine their eligibility for the credit, the Department of Treasury encourages you to review the information below and/or contact a tax professional.

What is a “Homestead”?

Your homestead is the place where you have your permanent home. It is the place to which you plan to return whenever you go away. You must be the owner and occupant or be contracted to pay rent and occupy the dwelling. You can only have one homestead at a time. Cottages, second homes and property you own and rent/lease to others does not qualify as a homestead. College dormitories do not qualify as homesteads.

Who qualifies for a Homestead Property Tax Credit?

You may claim a property tax credit if all of the following apply beginning 2012:

  • Your homestead is in Michigan
  • You were a resident of Michigan for at least six months during the year
  • You own or are contracted to pay rent and occupy a Michigan homestead on which property taxes were levied
  • If you own your home, your taxable value is $135,000 or less
  • Your total household resources are $50,000 or less(Part year residents must annualize total household resources to determine if a credit reduction applies)

If 100% of your total household resources are received from the Department of Human Services, you do not qualify

You may claim a property tax credit if all of the following apply for 2011 and prior years:

  • Your homestead is in Michigan
  • You were a resident of Michigan for at least six months during the year
  • You own or are contracted to pay rent and occupy a Michigan homestead on which property taxes were levied
  • Your household income is $82,650 or less(Part year residents must annualize household income to determine if a credit reduction applies)

If 100% of your total household income is received from the Department of Human Services, you do not qualify

Checklist for Determining Total Household Resources

2011 and Prior Years – Checklist for Determining Household Income

Checklist for Preparing a Homestead Property Tax Credit

Sample Property Tax Statement – Review the sample statement to understand where to find the information you need. Sample Property Tax Statement

Frequently Used Homestead Property Tax Credit Forms and Instructions

How do I file a Homestead Property Tax Credit (MI-1040CR)?

If you are required to file a Michigan Individual Income Tax return (MI-1040), submit the Homestead Property Tax Credit Claim (MI-1040CR) with your MI-1040. If you are not required to file an MI-1040, you may file your Homestead Property Tax Credit Claim by submitting form MI-1040CR only. The due date for filing an Income Tax return is April 15.

If you are active military, an eligible veteran, or the surviving spouse of a veteran, complete the MI-1040CR and the MI-1040CR-2, Homestead Property Tax Credit Claim for Veterans and Blind People. File the form that gives you the larger credit.

If you are blind and own your own home, complete the MI-1040CR and the MI-1040CR-2. File the form that gives you the larger credit. Important note: If you are blind and rent, you must use the MI-1040CR, you cannot use the MI-1040CR-2.

What are Total Household Resources?

Total household resources include all income received by all household members during the year, including income that might be exempt from federal adjusted gross income. Losses from business activity may not be used to reduce total household resources. For a listing of income sources to include in total household resources, view Income and Deductible Items.

What is Household Income?

For 2011 and prior years, household income includes all income received by all household members during the year, including income that might be exempt from federal adjusted gross income. For a listing of income sources to include in household income, view Income and Deductible Items.

What Are Qualified Health Insurance Premiums?

Some qualified paid health insurance premiums may be deducted from household income to compute the homestead property tax and other credits allowed on the Michigan income tax return. View Qualified Health Insurance Premiums.

Special Situations

Foreclosure - Due to economic conditions many individuals are experiencing mortgage foreclosure, repossession of their home and/or cancellation of debt. Any change in home ownership has an impact on the preparation of the Michigan Individual Income Tax Return (MI-1040) and/ or Homestead Property Tax Credit Claim (MI-1040CR). If you have been involved in a mortgage foreclosure or repossession of your home, view Information For Mortgage Foreclosure Or Home Repossession And Your Michigan Income Tax Return.

FIP/DHS Recipients – Your credit must be prorated based on income from other sources to total income. If 100% of your income is received from the Department of Human Services, you do not qualify for a Homestead Property Tax Credit. For assistance calculating the credit refer to worksheet 3 “FIP/DHS BENEFITS” in the Michigan Individual Income Tax MI-1040 booklet or the estimator available on the website. For those who received Family Independence Program (FIP) assistance from the State of Michigan or other public assistance, you may be eligible to claim a home heating credit if you owned and occupied your home or were contracted to pay rent. View the instructions in the MI-1040CR-7 booklet.

Rent Assistance – If any portion of your rent was paid on your behalf by MSHDA, or any other government agency, you are only allowed to claim the portion of your rent that you actually paid. Do not claim any amount that was paid on your behalf by MSHDA or any other government agency.

Public Housing – If the owner does not pay property tax or a service fee, you are not eligible to claim a property tax credit and a credit will not be issued.

Service Fee/PILOT Housing is an agreement between a municipality and a property owner (private or public) to pay a service fee instead of property taxes. Regardless of the amount of rent paid, the Income Tax Act provides that a renter living in Service Fee/PILOT housing must calculate the property tax credit using only 10% of rent paid.

You can find out if a property is subject to Service Fee/PILOT housing by contacting the city/township/county office. Often, Service Fee/PILOT housing is low income or senior citizen housing that can include an apartment or the rental of a single family home.

           Important Note: It is the renter's responsibility to determine if the rental property is
           Service Fee/PILOT housing before claiming a credit. Service fees are typically less
           than property taxes. FAQ’s for Service Fee/PILOT Housing

Alternate Property Tax Credit for Renters Age 65 or Older: An alternate credit is available only to renters age 65 or older whose rent is more than 40% of their total household resources or household income for 2011 and prior years. For assistance calculating the alternate credit refer to worksheet 4 “Alternate Property Tax Credit for Renters Age 65 and Older” in the Michigan 1040 Individual Income Tax booklet or the estimator available on the website.

Nursing Home, Home for the Aged and Adult Foster Care – If the facility pays local property taxes, you may claim your portion of those taxes for credit. You may not claim rent or monthly fees on the property tax credit. If both you and your spouse live in the facility, add your shares together.

If one spouse lives in a nursing home or foster care home and the other spouse maintains a home, you may combine the taxes/rent for the homestead and your share of the facility's property taxes to compute your claim.

If you are single and maintain a homestead (that is not rented to someone else) while living in a nursing home or adult care facility, you may claim either your homestead or your share of the facility’s property taxes, but not both. Use the one that gives you the larger credit.

Mobile Home Park Resident – You may claim $3 per month specific tax up to a maximum of $36 and 20% of the yearly rent amount less the specific tax (maximum $36). If you paid additional taxes on attached buildings (garage, tool shed, etc.), then you may also claim that amount.

Cooperative Housing – You may claim your share of the property taxes on the building. If rent is paid on the land under the building, you may also claim 20 percent of that land rent. (Do not take 20 percent of your total monthly payment.) You may request a statement from the co-op showing your share of the property taxes.

Moved during the year – It is important to know the date you moved out of the home you are selling or renting and the date you moved into the home you are buying or renting. If you sell your home for more than you paid for it, plus improvements, you will have a capital gain. In most cases the gain is not taxable, but it must still be included in your total household resources.

If you rented, use total rent paid, then prorate the first/last month based on days of occupancy to determine the total amount of rent that may be claimed for credit.

Beginning in 2012, the taxable value of the home which you are claiming credit for must be $135,000 or less. If you bought or sold your home, you must prorate your taxes to determine the taxes that can be claimed for credit. Use only the taxes levied (billed) in the year of claim on each Michigan homestead, then prorate taxes based on days of occupancy.

If you owned more than one home, you may only claim the prorated taxes for homes with a taxable value of $135,000 or less. Do not include taxes on out-of-state property. If you sold a home, you must also include the capital gain from the sale of your home in total household resources or total household income for tax years 2011 and prior, even if the capital gains are not included in adjusted gross income.

The combined property taxes and/or rent may not exceed 12 months.

Other Helpful Information

Principal Residence Exemption – If you own and occupy your principal residence, it may be exempt from a portion of your local school operating taxes. To claim an exemption, complete the Homeowner's Principal Residence Exemption Affidavit, (Form 2368) and file it with your township or city assessor.

Rescinding Your Homeowner's Principal Residence Exemption. If you claim an exemption and no longer use the home as a principal residence, you must notify your township or city assessor by filing the Form 2602, Request to Rescind Homeowner's Principal Residence Exemption within 90 days of the change or you may be penalized.

Home Heating Credit – The Home Heating Credit is designed to assist low income families living in Michigan with the cost of heating their homes. It is a federally funded program and which is administered by several State of Michigan agencies. Home Heating Credit FAQ’s

Home Heating Credit Information

How to Choose a Tax Preparer Who's Right for You – Need assistance in completing your forms? You can hire a professional to prepare your taxes or you might qualify for free (or low fee) tax preparation services. Choosing a Tax Preparer

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