Instructions For Form Mi-1040cr - Homestead Property Tax Credit

Total household resources do NOT include:

uniform millage rate, are based on taxable value, and are

• Net operating loss deductions taken on your federal return

either levied in the entire taxing jurisdiction or they are

• Payments

used to provide police, fire, or advanced life support

received

participants

the

foster

services and are levied township-wide, except for all or a

grandparent or senior companion program

• Energy assistance grants

portion of a village.

• Government payments to a third party (e.g., a doctor).

NOTE: School operating taxes are generally only levied

on the non-homestead portion of the property and may not

NOTE: If payment is made from money withheld from

be included in taxes levied when computing the property

your benefit, the payment is part of total household

tax credit on any portion of the home not used as your

resources. (For example, the DHS may pay your rent

homestead.

directly to the landlord.)

Home used for business. If you use part of your home for

• Money received from a government unit to repair or

business, you may claim the property taxes on the living area

improve your homestead

of your homestead, but not the property taxes on the portion

• Surplus food or food assistance program benefits

used for business. Attach a copy of U.S. Form 8829 to your

• State and city income tax refunds and homestead property

Michigan return.

tax credits

• Chore service payments (these payments are income to the

Owner-occupied duplexes. When both units are equal,

you are limited to 50 percent of the tax on both units, after

provider of the service)

• The first $300 from gambling, bingo, lottery, awards, or

subtracting the school operating taxes from the total taxes

billed.

prizes

• The first $300 in gifts of cash or merchandise received, or

Owner-occupied income property.

Apartment building

expenses paid on your behalf (rent, taxes, utilities, food,

and duplex owners who live in one of the units or single

medical care, etc.) by parents, relatives, or friends

family homeowners who rent a room(s) to a tenant(s) must

• Amounts deducted from Social Security or Railroad

complete two calculations to figure the tax they can claim

Retirement benefits for Medicare premiums

and base their credit on the lower amount. First, subtract 20

• Life, health, and accident insurance premiums paid by

percent of the rent collected from the tax claimed for credit.

your employer

Second, reduce the tax claimed for credit by the amount

• Loan proceeds

of tax claimed as rental expense on your U.S. Form 1040.

• Inheritance from a spouse

Include a copy of the U.S. Schedule E with your Michigan

• Life insurance benefits from a spouse

return.

• Payments from a long-term care policy made to a nursing

Example: Your home has an upstairs apartment that is rented

home or other care facility

to a tenant for $395 a month. Total property taxes on your

• Most payments from The Step Forward Michigan program.

home are $2,150. Of this amount, $858 is claimed as rental

expense. The calculations are as follows:

For more information on total household resources, visit

Step 1:

$395 x 12 = $4,740 annual rent

Special Provisions for Farmers

$4,740 x .20 = $948 taxes attributable to the apartment

If you received a farmland preservation tax credit in 2013,

you must include it in total household resources. You may

$2,150 total taxes - $948 = $1,202 taxes attributable to owner’s

subtract the business portion of your homestead property tax

homestead

credit if you included it in taxable farm income.

Step 2:

Property Taxes That Can Be Claimed for Credit

$2,150 total taxes - $858 taxes claimed as a business

deduction = $1,292 taxes attributable to homestead

Ad valorem property taxes that were levied on your

homestead in 2013, including collection fees up to 1 percent

Step 3:

of the taxes, can be claimed no matter when you pay them.

The owner’s taxes that can be claimed for credit are $1,202,

You may add to your 2013 taxes the amount of property taxes

the smaller of the two computations.

billed in 2013 from a corrected or supplemental tax bill.

Farmers. Include farmland taxes in your property tax credit

You must deduct from your 2013 property taxes any refund

claim if any of the following conditions apply:

of property taxes received in 2013 that was a result of a

• If your gross receipts from farming are greater than your

corrected tax bill from a previous year.

total household resources, you may claim all of your taxes

Do not include:

on unoccupied farmland classified as agricultural. Do not

• Delinquent property taxes (e.g., 2012 property taxes paid

include taxes on farmland that is not adjacent or

in 2013)

contiguous to your home and that you rent or lease to

• Penalty and interest on late payments of property tax

another person.

• Delinquent water or sewer bills

• If gross receipts from farming are less than your total

• Property taxes on cottages or second homes

household resources and you have lived in your home

• Association dues on your property

more than ten years, you may claim the taxes on your

• Most special assessments for drains, sewers, and roads do

home and the farmland adjacent and contiguous to your

not meet specific tests and may not be included. You may

home.

include special assessments only if they are levied using a

Instructions For Form Mi-1040cr - Homestead Property Tax Credit - 2013 Page 2

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