Michigan Homestead Property Tax Credit

The following a brief synopsis of filing a Homestead Property Tax Credit:

You may claim a property tax credit if all of the following apply:

  • Your homestead is located in Michigan
  • You were a Michigan resident at least 6 months during a calendar year
  • You pay property taxes or rent on your Michigan homestead

You can only have one homestead at a time, and you must be the occupant as well as the owner or renter.

Household income must be less then $82,650.  The computed credit is reduced by 10% for every $1,000 (or part of $1,000) that household income exceeds $73,650. 

If you are not required to file a Michigan tax return, you may file your credit claim as soon as you know your 2015 household income and property taxes levied in 2015.

Use form MI-1040CR, or if you are blind, in the active military, are an eligible veteran or an eligible veteran’s surviving spouse, request form MI-1040CR-2.

Delaying Payment of Your Property Taxes:

Senior citizens, disabled people, veterans, surviving spouses of veterans and farmers may be able to delay paying property taxes. 

Household Income

Household income is the total income (taxable and nontaxable) of both spouses or of a single person maintaining a household.  It is your AGI, plus all income exempt or excluded from your AGI.

Household income does not include:

  • Payments received by participants in the foster grandparent or senior companion program
  • Energy assistance grants
  • Government payments to third party (e.g. a doctor)
  • Money received from a government unit to repair or improve your homestead
  • Surplus food or food stamps
  • State and city income tax refunds and homestead property tax credits
  • Chore service payments (these payments are income to the provider of service)
  • The first $300 from gambling, bingo, lottery, awards or prizes
  • The first $300 in gifts, cash or expenses paid on your behalf by a family member or friend
  • Amounts deducted from Social Security or Railroad Retirement benefits for Medicare premiums
  • Life, health and accident insurance premiums paid by your employer.  However, if you pay medical insurance or HMO premiums for you or your family, you may deduct the cost from household income.
  • Loan proceeds
  • Inheritance from a spouse
  • Life insurance benefits from a spouse

Property Taxes That Can be Claimed for Credit

Ad valorem property taxes that were levied on your homestead in 2015, including administration fees up to 1% of the taxes, can be claimed no matter when you pay them.  You must deduct from your 2015 property taxes any refund of property taxes received in 2015 that was a result of a corrected tax bill from a previous year.

Do not include:

  • Delinquent property taxes (e.g. 2014 property taxes paid in 2015)
  • Penalty and interest on late payments of property tax
  • Delinquent water or sewer bills
  • Property taxes on cottages or second homes
  • Association dues on your property
  • Most special assessments for drains, sewers and roads do not meet specific tests and may not be included.  You may include special assessments only if they are levied using a uniform millage rate, are based on taxable value and are either levied in the entire taxing jurisdiction or they are used to proved police, fire or advanced life support services and are levied township-wide, except for all or a portion of a village.
  • Home used for business (if you use part of your home for business, you may only claim the property taxes on the living area of your homestead) Note:  School operating taxes are only levied on the non-homestead portion of the property and may not be included in taxes levied when computing the property tax credit.
  • Owner-occupied duplexes.  When both units are equal, you are limited to 50% of the tax on both units, after subtracting the school operating taxes.
  • Owner-occupied income property.  Apartment building and duplex owners who live in one of the units or single family homeowners who rent a room(s) to a tenant(s) must do two calculations to figure the tax they can claim and base their credit on the lower amount.