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Homeowners

Homeowners

How to Claim the Credit

As a homeowner, the main piece of information you need to know when claiming a homestead property tax credit is the total amount of taxes levied on the property. The tax assessor’s office in any township, municipality, or city will typically send a property tax statement each summer and winter, and if you live in a village, impose a village tax once a year.

If you did not keep a copy of the property tax statements mailed to you, you can contact your city, township, or village assessors’ office. You may also look up your statements at BS&A Online, a portal for municipalities to store data - such as property taxes and utility amounts.

To ensure that you get the largest homestead property tax credit you are eligible for, view the example statements to identify the correct factors when filling out your MI-1040CR or MI-1040CR-2.

Reading a Property Tax Statement

  • Taxable value is the amount of the homestead that the owner will pay property taxes on. To qualify for the homestead property tax credit, your taxable value must not exceed a certain amount. This figure can change each tax year; verify the maximum taxable value in the tax year you are considering claiming for the homestead property tax credit. 

    Do not use the state equalized value (SEV) listed on your property tax statements. Using the SEV instead of the taxable value from your property tax statements will lead to adjustments and possible refund delays.

    Use the sample property tax statements and homestead property tax credit form to help identify where taxable value can be found and then reported.

    Cropped image of a property tax statement depicting taxable value, outlined in teal. property tax statement 1
    Cropped image of a property tax statement depicting taxable value, outlined in teal. property tax statement 2
    Cropped image of the Homestead Property tax credit form depicting line 9 with an teal box outlining where to put taxable value. Homestead Property Tax Credit Form

  • Taxes levied are all taxes billed to the property. The taxes levied are listed on the property tax statements with millage rates assigned. Property taxes are calculated using these millage rates. 

    Not every line billed on your property tax statements are calculated using a millage rate. Line items without a millage rate typically cannot be claimed toward the homestead property tax credit; they must be subtracted from the total taxes levied in order to give a total on your homestead property tax credit form. However, you can add the administrative fee billed to you (up to 1% of the taxes billed to you) to your total taxes levied.

    Read more to see what can and cannot be used to calculate total taxes levied. 

    Below, use the sample property tax statements and homestead property tax credit form to help identify where total taxes levied and line items could be found and then reported.

    Cropped image of a property tax statement depicting total taxes levied, outlined in red. Property Tax Statement 2
    Cropped image of a property tax statement depicting total taxes levied, outlined in red. Property Tax Statement 1
    Cropped image of the Homestead Property tax credit form depicting line 10 with an orange box outlining where to put taxes levied. Homestead Property Tax Credit Form

  • The school district code can be found:

    • on Treasury's school district code list;
    • on your property tax statement;
    • listed in the MI-1040 Instruction Booklet; or
    • by contacting your municipality’s assessor office.
    Cropped image of a property tax statement depicting the school district, outlined in purple. Property Tax Statement 1
    Cropped image of a property tax statement depicting school district code, outlined in purple. Property Tax Statement 2
    Cropped image of the Homestead Property tax credit form depicting line 4 with a purple box outlining where to put the school district code. Homestead Property Tax Credit Form

Living Situations

In addition to the general eligibility requirements needed to qualify for a homestead property tax credit, use the scenarios below to aid your understanding of how your living situation could impact the filing of this credit.

For situation specific guidance please consult a qualified tax professional to properly fill out the MI-1040CR or MI-1040CR-2.

You may not claim the property taxes billed on the portion of your homestead used for business. Only claim the portion of property taxes based on the living area of your homestead.   Typically, if you have a registered business on your homestead your principal residence exemption (PRE) is less than 100%. 

When your home is used for business and the principal residence exemption is between 100% and 0% the following example explains how to determine the eligible property taxes you may claim for credit. 

Example:

Your principal residence exemption is 85% and your property taxes for the year are $4500, with a school operating fee of $800.  

  1. $4500 – $800 = $3700. 
  2. .85 × $3700 = $3145
  3.  $3145 is your property tax total you can claim from credit.
Because the school operating fee is charged on the non-homestead portion of the property, the part of the homestead used for business, it is not claimable and needs to be subtracted from the property tax total. 

Income property types: 

  • owner-occupied duplex
  • single family home with a tenant who rents a room
  • apartment building where the owner lives in one of the units

Two calculations are used to figure the tax that the property owner can claim. You must perform both calculations and use the lower of the two as the base for the homestead property tax credit. 

First Calculation:

  • Calculate 23% of total rent collected in the year.
  • Then, subtract that from your total property taxes.

Second Calculation: 

  • Identify your total property taxes. 
  • Then, subtract the rental expenses claimed on your federal return.
If the second calculation was the lower of the two amounts, include a copy of the U.S. Schedule E with your Michigan return.
For duplexes, when both units are equal in square footage, you are limited to 50% of the tax on both units. You must subtract school operating taxes from the total taxes billed, then calculate the credit on the form. 
 
If you are purchasing your home on a land contract, you are considered the owner of the home and can use the property taxes levied on the property to calculate your credit.
Monthly payment amounts per the land contract are not considered rent.

Adults sharing a homestead can file for a property tax credit. 

Two or more adults, who are not spouses, own and occupy the homestead:

Each person may claim the homestead property tax credit based solely on each person’s share of:

Only one adult owns the homestead, but multiple adults occupy the homestead:

In this situation, only the individual who owns the homestead may claim a homestead property tax credit. The owner must include any gifts of cash or expenses paid on their behalf in their total household resources, including contributions from others living in the home used to pay household expenses (taxes, utilities, etc.).

While going through the foreclosure process you may claim the property taxes levied on the home you lived in during the redemption period. You may not claim those taxes levied on the home after the redemption period has expired.

If you are divorced and now filing as married filing separate consider the following scenarios:

Lived Together the Whole Year

If you lived together the whole year, you are entitled to one homestead property tax credit. Determine which spouse will claim the credit and divide it as desired. Along with the MI-1040CR or MI-1040CR-2, the spouse claiming the credit will complete parts 1 and 2 of Form 5049, Worksheet for Married, Filing Separately and Divorced or Separated Claimants.

Base the homestead property tax credit on the total household resources of both spouses, meaning the spouse claiming the credit will enter the other spouse’s total household resources on the “other nontaxable income” line.

Live Apart the Whole Year

If you lived apart the whole year you are each entitled to a property tax credit. Along with the MI-1040CR or MI-1040CR-2, each spouse will complete Part 3 of Form 5049, Worksheet for Married, Filing Separately and Divorced or Separated Claimants, explaining why they didn’t include the other spouse’s income. 

Base the homestead property tax credit on the following: 

  • your personal total household resources; and
  • your share of rent or property taxes.

Lived Together Part of the Year 

If living together part of the year and maintaining separate households for part of the year (divorce, separation, newly married etc.,) submit the following:

To complete Form 2105, Michigan Homestead Property Tax Credits for Separated or Divorced Taxpayers identify the following information:

  • Each spouse’s prorated total household resources (THR) for the time they lived together. 
  • Each spouse’s prorated THR for the time they lived apart.
  • The prorated property taxes or rent paid for when the spouses lived together.
  • Each spouse’s own share of property tax or rent paid when the spouses lived apart. 

For calculating the credit, enter the results of Form 2105, and each spouses own share of property taxes or rent paid when living apart on the MI-1040CR in their respective sections (part 3 for property taxes, part 4 for rent paid, part 5 for special housing). Then complete the form.

 

 

If you married in the year you are filing and are filing joint with your new spouse, you can claim a homestead property tax credit in the following way:

  • Determine each spouse’s share of rent (if you were renting as a single person) or property taxes levied (if you owned your home as a single person) for the period you lived in separate households. Use Form 2105, Michigan Homestead Property Tax Credit for Separated or Divorced Taxpayers, as a tool for prorating, even if you are not divorced or separated.
  • Add this amount to the rent or prorated taxes for the marital home after you were married.

If you are disabled or not, you will use your property tax statements billed to you and complete section A in Part 1 of the 1040CR. If you are a senior who is blind or a disabled veteran complete the 1040CR-2. Read more about which form to file if you are still unsure.

Read more about calculating this credit if a senior rents their home.

 

If you are a Michigan resident and own a home while attending college/university and all of the following apply, you may be eligible for a homestead property tax credit:

  • the homestead is in Michigan and property taxes were billed to you;
  • the taxable value on the property is under a certain amount or less; and
  • your total household resources do not exceed a certain amount.
If you are a Michigan resident and attend college or university outside of Michigan, you cannot claim property taxes for the property you rent in another state.
College students with permanent homes outside of Michigan are not considered Michigan residents and do not qualify for the homestead property tax credit. They should file their MI-1040 as nonresidents.

You may be entitled to a homestead property tax credit if:

  • you own your home
  • you didn’t sublease (rent) the home to others while you were away

Eligibility 

  • The farmer must own the home to claim the farmland parcels that are a part of the homestead, and not include parcels rented or leased to someone else.
  • The taxable value limit is comprised of both the farmland and homestead land. 
    • The homestead part of the property taxes a farmer claims cannot exceed the taxable value limit for the year, but the taxable value limit as a whole could exceed this annual limit when all the land's taxable value is totaled.
  • The farmland part of the property taxes must be: 
    • classified as agricultural (can be farmed), and unoccupied (no human occupants). 
    • adjacent (sharing a common boundary) to your homestead, and/or a contiguous lot (farmland and homestead share a common boundary to other parcels), unless your gross receipts are greater than your total household resources.

    What farmland taxes can I include in the property tax credit?

    • If the gross receipts from farming are greater than your total household resources, you may claim all of your taxes on unoccupied farmland classified as agricultural. Do not include taxes on farmland that is not adjacent or contiguous to your home and that you rent or lease to another person.
    • If gross receipts from farming are less than your household income and you have lived in your home more than ten years, you may claim the taxes on your home and the farmland adjacent and contiguous to your home.
    • If gross receipts from farming are less than your household income and you have lived in your home less than ten years, you may claim taxes on your home and five acres of farmland adjacent and contiguous to your home.
    If you are a renter of the homestead, do not claim parcels of farmland owned by someone else or your family in your credit. The farmer must own the homestead to claim all farmland parcels. Read more about claiming a credit as a renter.