Category: Government Benefits and Programs
A homestead is your permanent, primary residence and must be located in the State of Michigan. You must be the owner and occupant or contracted to pay rent and occupy the residence at least six (6) months out of the year. According to Michigan state law, vacation homes, cottages, second homes, property you rent to others, and college/university operated housing does not qualify for the credit. You can only have one (1) homestead at a time. This is a summary of the homestead tax credit.
You may claim a property tax credit if all of the following apply:
Homeowners and renters whose total household resources (100%) are received from the Michigan Department of Health and Human Services (i.e. FIP cash assistance, FAP food assistance, etc.), you do not qualify. This rule does not apply to recipients of social security and other disability payments.
To calculate your total household resources:
Checklist for preparing a Michigan Homestead Property Tax Credit Claim
Sample Property Tax Statement
You may submit your Michigan Homestead Property Tax Credit Claim (MI-1040CR) with your MI-1040, if you are required to file an individual tax return. However, you are not required to file a Michigan tax return to claim the homestead property tax credit. You have four (4) years from the original due date to file your claim.
Active military personnel, eligible veterans, or surviving spouse of a veteran should complete both the MI-1040CR and the MI-1040CR-2 (Michigan Homestead Property Tax Credit Claim for Veterans and Blind People). Submit the form that gives you the larger credit. Blind homeowners should also complete both the MI-1040CR and the MI-1040CR-2 and file the form that gives you the larger credit. Renters who are blind must file the MI-1040CR.
Total Household Resources
The goal in tax planning is to find ways to reduce your taxable income. You begin that process by analyzing your household income and assets. Total household resources include all income received by all household members during the year, including income that might be exempt from federal adjusted gross income. Losses from business activity may not be used to reduce total household resources. Some things to consider as household resources include:
Special Qualifying Circumstances
Renters aged 65 or older qualify for the Alternate Property Tax Credit whose rent is 40% of their total household resources. Visit the Michigan Homestead Property Tax Credit – Homepage for further information on the worksheet and estimator.
For cooperative housing you may claim your share of the property taxes on the building and land under the building. If rent is paid on the land, you may claim 20% of that land rent. Association fees do not apply.
Family Independence Program (FIP) recipients who receive cash assistance from the Michigan Department of Health and Human Services (MDHHS) can claim a prorated credit based on income from other sources compared to your total income. FIP recipients who receive 100% of their total household resources from MDHHS do not qualify for this credit. Visit the Michigan Homestead Property Tax Credit – Homepage for further information on the Individual Tax Credit instructional booklet and how to calculate the credit.
Homeowners involved in a mortgage foreclosure or home repossession will have an impact on their Individual Income Tax Return (MI-1040) and Homestead Property Tax Credit (MI-1040CR). Visit the Michigan Homestead Property Tax Credit – Homepage on Information for Mortgage Foreclosure or Home Repossession and Your Michigan Income Tax Return.
Mobile home park residents qualify to claim $3/month specific tax up to $36 and 20% of their annual rent expense less the maximum $36 specific tax. You may also claim tax payments on attached buildings (i.e. garage, tool sheds, etc.).
Homeowners and renters must know the move-in and move-out dates from a home. Renters must know the date you rented and move-out date. Homeowners must know the purchase date and the date you sold a home. Homeowners with more than one property may only claim the prorated taxes for homes with a taxable value of $135,000 or less. The taxable value is the value on which property taxes are calculated (See your tax statement or contact your local city/township/county assessor’s office).
If you sell your home for more than you paid, plus improvements, it is considered a capital gain. In general, capital gains are not taxable but must still be added to your total household resources from the sale of your home. When buying or selling a home you must prorate only the taxes levied (billed) to determine the taxes that can be claimed for credit. Taxes are prorated by using the amount billed during the tax year on each homestead and divide based on the days of occupancy. The combined property taxes and/or rent may not exceed twelve (12) months.
Residents of “special care” facilities (nursing home, home for the aged, adult foster care) may claim the credit for rent only. If the rent includes other services, you can calculate the portion that constitutes the rent by determining your portion of the property taxes by square footage, or, by dividing the amount of property taxes by the number of residents the home is licensed for. You may be required to submit the landlord’s documentation to verify the claim.
If you live in public housing and the owner does not pay property taxes or a service fee, you are not eligible for the homestead property tax credit.
If you live in Section 8 housing and a portion of your rent is paid by MSHDA, or any government agency, you may claim your portion of the rent that you actually paid.
If you live in Service-Fee Housing you may claim only 10% of the rent for the homestead property tax credit. Service-Fee Housing is a program where the property owner and the municipality agree on a service-fee payment instead of property taxes. Service-fee housing are typically low-income or senior-citizen housing and may be an apartment or single-family home. Service-fees are usually less than property taxes.
In shared housing situations, it should be noted that in all scenarios you are required to include gifts of cash or expenses paid on your behalf in your total household resources. This includes all contributions from other occupants in the home used to pay taxes, rent, utilities, etc.
Eligibility criteria for shared housing:
Principle Residence Exemption (PRE)
Owner/occupants of their principle residence may be exempt from a portion of your local school operating taxes. The PRE (formerly, the Homestead Exemption) exempts a principle residence from taxes levied by a school district for school operating purposes up to 18 mills. You must be a Michigan resident who owns and occupies the property as a principle residence. The PRE is a separate program from the Homestead Property Tax Credit.
A property owner may claim a PRE by submitting Affidavit Form 2368 (link below) to the assessor for the city or township where the home is located. The first deadline is June 1 and a second deadline is November 1 each year. However, when you no longer own or occupy the property as a primary residence, you must file a Request to Rescind Homeowner’s Principle Residence Exemption (PRE) – Form 2602. You must request to rescind the PRE by submitting From 2602 to the city assessor within ninety (90) days of the change or be penalized. Failure to rescind a PRE may result in additional taxes, interest and penalties.
A conditional rescission allows an owner to receive a PRE on their current property and previously exempted property simultaneously up to three (3) years. The owner must submit a Conditional Rescission of Principle Residence Exemption (PRE) – Form 4640 to their city or township assessor before June 1 or November 1 of the first year of the claim.
Disabled Veterans Property Tax Exemption
Disabled veterans may be eligible to receive a full exemption from paying property taxes on their primary residence if 100% disabled, service-connected. They are also eligible for the Homestead Property Tax Credit separate from the property tax exemption program. Disabled veterans or surviving spouse may request the exemption by filing an affidavit to the Michigan Department of Treasury the first two (2) months of the assessment year (January or February). This benefit also qualifies disabled veterans for specially adapted housing. Please contact the Michigan Department of Treasury for more information.
First-Time Homebuyers and Homesteaded Properties
One final note, first-time home buyers should also verify if their property has been homesteaded. In such cases, this means that your property taxes are significantly reduced. In Michigan, the tax break for “homesteaded” properties equate to the millage amount of a school district, which is about one-half of your tax bill. The benefits of a homesteaded property are not only lower taxes, but, lower taxes also mean lower mortgage payments. Be sure to inquire with your realtor regarding properties that are homesteaded vs. non-homestead before you purchase a home.
When submitting a request for review if your credit was less than expected, use the following checklists depending on your occupancy status.
Be sure to visit the Homestead Property Tax Information – Homepage for more information regarding frequently used homestead property tax credit forms and instructions. If you still have questions, it is advised that you contact a local tax professional for further assistance.
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Michigan Homestead Property Tax Information – Homepage
Michigan Homestead Property Tax Information for Separated or Divorced Taxpayers
Worksheet for Married, Filing Separately, and Divorced or Separated Claimants
Checklist for Total Household Resources https://www.michigan.gov/documents/taxes/ChecklistDetermineTHR_444822_7.pdf
List of Income and Deductible Items from Total Household Resources
Qualified Health Insurance Premiums
Information for Mortgage Foreclosure or Home Repossession and Your Michigan Income Tax Return
Michigan Department of Treasury – Individual Income Tax Division
Principle Residence Exemption – Homepage
Homeowner’s Principle Residence Exemption Affidavit – Form 2368
Principle Residence Exemption Guidelines
Request to Rescind Homeowner’s Principle Residence Exemption (PRE) – Form 2602
Conditional Rescission of Principle Residence Exemption (PRE) – Form 4640
Michigan Homestead Property Tax Credits for Separated or Divorced Taxpayers
Michigan Married Filing Separately or Divorced and Separated Claimants Schedule
Welcome to The Community Advocate Network. My name is Deborah Mitchell, I am a graduate in Social Work and Registered Social Work Technician. My human service background began in 2007 which includes medical case management and service navigation for the indigent population, outpatient mental health counseling with substance use and abuse disorders, supportive employment and job development for mental health consumers, and structured living domicile management.