Homestead Property Tax Credit and Adjacent and Contiguous Property

Notice: Homestead Property Tax Credit and Adjacent and Contiguous Property 

Published: April 17, 2024

Updated: January 8, 2025

This notice provides Michigan homestead owners and renters with information regarding availability of the homestead property tax credit (HPTC) for adjacent and contiguous property. This Notice was updated on January 8, 2025 to correct the link to the Homestead Property Tax Credit website and to include the text of the revised FAQ which has been removed from Treasury's website since the Notice was first published.

The HPTC is an individual income tax credit that is available to certain taxpayers who owned or rented their Michigan homestead for at least six months of the year. More details of the HPTC can be found at https://www.michigan.gov/taxes/iit/credits/hptc.

 In general, qualifying owners or renters of real property in Michigan may claim an HPTC calculated — in part — on property taxes levied on their homestead. “Homestead” as defined in the Michigan Income Tax Act (MITA), MCL 206.508(2), means:

[A] dwelling . . . that is subject to ad valorem taxes . . . owned and occupied as a home by the owner of the dwelling or unit, or occupied as the dwelling of the renter or lessee, including all unoccupied real property not classified for ad valorem tax purposes as commercial, industrial, residential, or timber-cut over, owned by the owner of the homestead. . . . [A] homestead does not include unoccupied real property that is leased or rented by the owner to another person and that is not adjacent and contiguous to the home of the owner.  MCL 206.508(2). (Emphasis added).

In other words, a homestead includes property adjacent and contiguous to the home of the owner only when that property is unoccupied and not classified a commercial, industrial, residential, or timber-cut over.

Previously, Treasury had published an FAQ that indicated a homestead for HPTC purposes included all adjacent and contiguous unoccupied property not rented to someone else. That FAQ was incorrect and clearly conflicted with statute. Adjacent and contiguous property will only be included in the HPTC if the following conditions are satisfied:

1. The owner must own and occupy the dwelling parcel.

2. The owner must own the additional parcels being claimed.

3. The additional parcels

• must not be classified as commercial, industrial, residential, or timber-cut over (MCL 206.508(2)),
• must be adjacent and contiguous to the dwelling parcel,
• cannot be rented to someone else at anytime during the year, and
• must be unoccupied.

Information regarding a homeowner's specific situation(s) can be found at https://www.michigan.gov/taxes/iit/credits/hptc/homeowners.