How to Calculate a Michigan Homestead Tax Credit

The Michigan Homestead Tax Credit gives residents money back on their property taxes or rent paid.

The Michigan Homestead Tax Credit gives some Michigan residents a refund on the amount of property taxes they owe or the amount of property taxes their landlord owes. Before calculating your Michigan Homestead Tax Credit, print out both the MI-1040CR form and instructions from the Michigan Department of Treasury website. Read through the MI-1040CR instructions before trying to complete the form. The instructions will help answer questions such as who qualifies for this tax credit for the current tax year and what counts as household resources.

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Step 1

Start with the amount of taxes that will be charged on your home for the current tax year, if you are an owner, or the amount of rent you paid for the year. Multiply the amount by 20 percent, then add the amount of your property taxes or rent to the sum. So, if you paid $750 in rent each month for a year, multiply $9,000 by 20 percent, which is $1,800. You would then add $1,800 to the $9,000 you paid in rent, for a total of $10,800. This is the value of your homestead taxes for the purpose of calculating your tax credit.

Step 2

Add up your household resources, taking into account any allowed adjustments like health insurance premiums that you paid for the year. Wages, dividends, child support, alimony, business or farm income, pension, annuity, IRA benefits, capital gains, social security, SSI, railroad retirement benefits, unemployment payments, worker's compensation, veteran's disability payments and payments from the state of Michigan for financial assistance (excluding food benefits) count in the household resources total.

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Step 3

Multiply your household income by 3-1/2 percent, unless you are a senior citizen, blind, deaf or disabled. If you fall into one of these groups, multiply income of less than $3,000 by zero, income between $3,001 and $4,000 by 1 percent, income between $4,001 and $5,000 by 2 percent, income between $5,001 and $6,000 by 3 percent and income above $6,000 by 3-1/2 percent. This is the amount of your property tax obligation that is not refundable. These were the applicable income amounts for the 2009 tax year.

Step 4

Subtract the amount of your property tax that is not refundable from the value of your homestead taxes (calculated in step one,) and then multiply the difference by 60 percent. The sum is your homestead tax credit, assuming it is not more than the maximum credit for the current tax year. If so, you will receive only the maximum. In 2009 the maximum credit was $1,200, so tax filers could not get more than $1,200 for this credit.

Things You'll Need

  • MI-1040CR form

  • MI-1040CR instructions

  • Total household resources

  • Total property taxes due or rent paid

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