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

• Grantor trusts (if treated as an owner under Internal

or MI-1040CR-7, line 18. Homestead Property Tax Credits

Revenue Code (IRC) Sections 671 through 679)

are not included in Michigan total household resources. If

you included this amount in your taxable farm income, you

• Trusts created by the death of a spouse if the trust

may subtract it from your total household resources.

requires 100 percent of the income from the trust to be

distributed each year to the surviving spouse

Effect on Your 2013 Taxable Farm Income

The following should file a Farmland Preservation Tax

The portion of your Homestead Property Tax Credit

Credit (Form 4594):

that is for farm buildings and land is business related. To

• Estates, including property taxes from the date of death,

determine the portion that is business income, divide the

and farm income required to be reported on the entity's

taxable value of your buildings and farmland by the total

U.S. Form 1041

taxable value of your property, then multiply by the credit

(see below). Your local assessor can show you how your

• Corporations other than S corporations

total taxable value was determined.

• S corporations that had an FDRA before January 1,

1989, and in 1991 elected to file C-8022

TV of farmland portion

2012 Homestead

of homestead and buildings

Property Tax

• Trusts, except as noted previously.

Total taxable value

Credit amount

Form 4594 can be found at or by

calling (517) 636-4486.

= Portion of Homestead Property

Tax Credit that is business income

What to Do With a Jointly Payable Check

You must include your 2012 Farmland Preservation Tax

Take the check, remittance advice, and a copy of your

Credit amount and the business portion of your 2012

FDRA(s) to your county treasurer(s). He or she will ask

Homestead Property Tax Credit in your 2013 federal AGI.

you to endorse the check, then use the refund to pay any

If you own your property as an individual but the farming

delinquent taxes. Any amount left will be refunded to you.

activity is operated under a partnership, S-Corp or LLC,

Property Taxes That Can Be Claimed for Credit

report the Farmland Preservation Tax Credit on your

personal return.

The property taxes levied in 2013 on enrolled land can

be claimed for the 2013 credit, regardless of when they

Was your 2012 tax refund (MI-1040, line 35) greater than

are paid. Special assessments (those not based on State

the amount of your 2012 Farmland Preservation Tax

equalized or taxable value), penalties, and interest cannot

Credit (MI-1040, line 26) plus the business portion of your

be claimed.

Homestead Property Tax Credit?

Taxes on land not eligible for either the principal residence

If yes, you may subtract on Schedule 1, line 16, the excess

or qualified agricultural property exemption usually are

refund amount you received in 2013 to the extent it was

not eligible for a Farmland Preservation Tax Credit. The

included in federal AGI.

exception is rental property where the tenant participates

Land Owned by a Person Under a Life Estate

in the farming operation at least 1,040 hours per year. To

compute the taxes that can be claimed for credit, exclude

A person in possession for life under a life estate with

the school operating tax and multiply the balance by

remainder interest to another person may claim all the

the percentage of exemption allowed by the local taxing

property taxes to compute the credit. However, the life

authority. See example below:

estate holder and the person(s) holding the remainder

interest may choose to divide the property taxes in the

Taxes levied ............................................. $2,000

same manner as they divide revenue and expenses. A

School operating tax ................................... $350

written agreement must be attached to each return.

Principal residence exemption.....................60%

$2,000

$1,650

Land Owned by a Partnership

- 350

x 60%

Property taxes on land owned by a partnership are

$1,650

$990 May be claimed for credit

allocated to the partners based on the partner’s percent of

If you have entered into more than one agreement with the

income or ownership. All partners must use the same basis

MDARD, the sum of the taxes under each agreement is

for filing.

used to compute your credit. The amount of credit you will

If the partnership files a U.S. Form 1065, the percent is

receive is based on total household income.

on each partner’s Schedule K-1. If the partnership is not

Computing the Homestead Property Tax Credit

required to file a U.S. Form 1065, the percentage of income

is on the partnership agreement or on a statement signed

You must include your total Farmland Preservation Tax

by all the partners. If no U.S. Form 1065 is required, use

Credit amount on your MI-1040CR, MI-1040CR-2 or your

Part 2 to show percentage of income or ownership.

MI-1040CR-7. Enter the amount of credit you received in

2013 on the MI-1040CR, line 16, MI-1040CR-2, line 15,

Form Mi-1040cr5 - Michigan Farmland Preservation Tax Credit Instructions - 2013 Page 4

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