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• Minister’s housing allowance

• Association dues on your property

• Forgiveness of debt, even if excluded from AGI (e.g.,

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

mortgage foreclosure)

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

• Reimbursement from dependent care and/or medical care

include special assessments only if they are levied using a

spending accounts

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

• Payments made on your behalf, except government

either levied in the entire taxing jurisdiction or they are

payments, made directly to an educational institution or

used to provide police, fire, or advanced life support

subsidized housing project.

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

portion of a village.

Total household resources do NOT include:

NOTE: School operating taxes are generally only levied on

• Net operating loss deductions taken on your federal return

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

• Payments

received

participants

the

foster

included in taxes levied when computing the property tax

grandparent or senior companion program

credit on any portion of the home not used as your homestead.

• Energy assistance grants

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

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

NOTE: If payment is made from money withheld from

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

of your homestead but not the property taxes on the portion

your benefit, the payment is part of total household

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

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

directly to the landlord.)

your Michigan return.

• Money received from a government unit to repair or

Owner-occupied duplexes. When both units are equal,

improve your homestead

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

• Surplus food or food assistance program benefits

subtracting the school operating taxes from the total taxes billed.

• State and city income tax refunds and homestead property

Owner-occupied income property.

Apartment building

tax credits

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

• Chore service payments (these payments are income to the

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

provider of the service)

do two calculations to figure the tax they can claim and base

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

their credit on the lower amount. First, subtract 20 percent

prizes

of the rent collected from the tax claimed for credit. Second,

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

reduce the tax claimed for credit by the amount of tax

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

claimed as rental expense on your U.S. Form 1040. Include a

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

copy of the U.S. Schedule E with your Michigan return.

• Amounts deducted from Social Security or Railroad

Example: Your home has an upstairs apartment that is rented

Retirement benefits for Medicare premiums

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

• Life, health, and accident insurance premiums paid by

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

your employer

expense. The calculations are as follows:

• Loan proceeds

Step 1: $395 x 12 = $4,740 annual rent

• Inheritance from a spouse

$4,740 x 0.20 = $948 taxes attributable to the apartment

• Life insurance benefits from a spouse

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

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

owner’s homestead

home or other care facility

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

• Most payments from The Step Forward Michigan program

deduction = $1,292 taxes attributable to homestead

For more information on total household resources, visit

Step 3: The owner’s taxes that can be claimed for credit are

$1,202, the smaller of the two computations.

Property Taxes That Can Be Claimed for Credit

Rent That Can Be Claimed for Credit

Ad valorem property taxes levied on your homestead in 2013,

You must be under a lease or rental contract to claim rent for

including collection fees up to 1 percent of the taxes, can

credit. In most cases, 20 percent of rent paid is considered

be claimed no matter when you pay them. You may add to

property tax that can be claimed for credit. The following are

your 2013 taxes the amount of property taxes billed in 2013

exceptions:

from a corrected or supplemental tax bill. You must deduct

• If you rent or lease housing that is subject to a service

from your 2013 property taxes any refund of property taxes

charge or fees paid instead of property taxes, you may

received in 2013 that was a result of a corrected tax bill from

claim a credit based upon 10 percent of the gross rent paid.

a previous year.

• If your housing is exempt from property tax and no

Do not include:

service fee is paid, you are not eligible for credit. Use the

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

amount the landlord gives you and enter rent paid on

in 2013)

line 46 and 10 percent of rent on line 47, and follow

• Penalty and interest on late payment of property tax

instructions. This includes university- or college-owned

• Delinquent water or sewer bills

housing.

• Property taxes on cottages or second homes

Form Mi-1040cr2 - Michigan Homestead Property Tax Credit Claim For Veterans And Blind People Instructions - 2013 Page 4

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