Form Mi-1040cr5 - Michigan Farmland Preservation Tax Credit Instructions

General Information

will not be issued if you later prove that the taxes have

What is the Farmland Preservation Tax Credit?

been paid.)

The Farmland and Open Space Preservation Act (Public

Note: If a claimant falsely specifies that the receipt

Act 116 of 1974, as amended) Tax Credit gives back to

showing payment of the property taxes is attached to the

farmland owners a share of the property tax they pay on

return and the property taxes are not paid before the return

their farmland. Farmland owners qualify for credit by

is filed, all future payments of credits to the claimant will

agreeing to keep the land as farmland and not develop it for

be made payable jointly with the county treasurer of the

another use.

county in which the property under agreement is located

(Section 36109 (7)).

Farmland Preservation Tax Credit Qualifications

• If your property tax statement includes property that is

You qualify if you meet all of these requirements:

not covered under an FDRA, you must show what

• You own farmland,

portion of your taxable value and property tax is for

• You have entered into a Farmland Development Rights

land enrolled in the FDRA. Your local equalization

Agreement (FDRA) with the Michigan Department of

officer or your local assessor must give you this

Agriculture and Rural Development (MDARD), and

information on official letterhead, if it is not detailed on

your property tax bills.

• You are eligible to file an MI-1040.

• If you farmed under a partnership, include a copy of

Farmland Development Rights Agreement

your U.S. Form 1065 and Schedules K and K-1.

Through an FDRA you receive property tax relief in return

• If you farmed under an S corporation, include U.S.

for your pledge not to change the use of your land.

Form 1120S and Schedules K and K-1.

Caution: The FDRA restricts development of your land.

• Joint ownerships must include a statement signed by all

Before making any changes to property covered under this

owners specifying each owner’s percentage of income

agreement or to its ownership, consult the MDARD. Some

and expenses.

changes may make your property ineligible for credit.

When to Claim a New Agreement

Property Development Right

New agreements must be approved by your local

A Property Development Right (PDR) is an easement

government by November 1, 2013, for you to claim a 2013

purchased from the landowner by MDARD on behalf

credit for that agreement. The new FDRA is not final

of the State of Michigan to protect development of prime

until you receive a copy from the MDARD that has been

farmland.

recorded at the Register of Deeds. Credit for the new FDRA

will not be allowed unless a copy of the recorded agreement

How to Claim the Credit

is attached to your return. If you do not get your copy

Complete the forms and file them with your MI-1040.

before April 15, 2014, file your return without claiming

Attach a copy of pages 1 and 2 of your U.S. Form 1040 and

credit for the new agreement. File MI-1040CR-5 with a

copies of U.S. Schedules C, D, E, F; and U.S. Forms 4797,

new MI-1040 and write “amended” at the top of the form

4835, 1065, 1120S, and K-1s if you needed to complete

in blue or black ink for quickest processing. Do not file an

them for your federal tax return. If you are not required

Amended Michigan Income Tax Return (MI-1040X-12).

to file a federal return, attach a schedule showing farm

income and expenses used to arrive at net income.

Which Form to File

You may file one of two forms depending on the type of

Note: You must attach copies of the federal schedules that

farm ownership.

show the income and expense of the farming operation

regardless of what kind of entity reports them (e.g., S

The following should file using MI-1040CR-5 with their

corporation, trust, or partnership). You must also include

income tax return:

the following:

• Individuals who own a farm independently

• A copy of your 2013 property tax statements that show

• An individual in possession under a life estate with

the taxable value, an itemized listing by millage rate of

remainder to another person

the property taxes levied, and the corresponding

• Representatives of deceased single persons. Include

agreement numbers.

property taxes and income from January 1 to the date of

• A 2013 MI-1040CR with a completed schedule of total

death

household resources even if you are not qualified to

• Partnerships

receive the credit (see line 8 instructions on page 6).

• Joint owners

• A copy of the receipt showing that your 2012 or 2013

property taxes were paid. If your property taxes have

• Limited liability companies

not been paid or you do not attach your receipt(s),

• S corporation shareholders, except shareholders of

Treasury will mail you a check made jointly payable to

S corporations who had an FDRA before January 1,

you and the county treasurer for the county where the

1989, and in 1991 elected to file under the Single

property is located. (A new check payable only to you

Business Tax (SBT) Act on C-8022

Form Mi-1040cr5 - Michigan Farmland Preservation Tax Credit Instructions - 2013 Page 3

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