Property Taxes That Can Be Claimed for Credit
Ad valorem property taxes that were levied on your homestead in the tax year, including collection fees up to 1 percent of the taxes, can be claimed no matter when you pay them. You may add to your current taxes the amount of property taxes billed from a corrected or supplemental tax bill.
You must deduct from your property taxes any refund of property taxes received that was a result of a corrected tax bill from a previous year.
Do not include:
- Delinquent property taxes (you claim the tax the year it was billed)
- 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 provide police, fire, or advanced life support services and are levied township-wide, except for all or a portion of a village.
Note: School operating taxes are generally only levied on the nonhomestead portion of the property and may not be included in taxes levied when computing the propert tax credit on any portion of the home not used as your homestead.
Home used for business
If you use part of your home for business, you may claim the property taxes on the living area of your homestead, but not the property taxes on the portion used for business.
Owner-occupied duplexes
When both units are equal, you are limited to 50 percent of the tax on both units, after subtracting the school operating taxes from the total taxes billed.
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. First, subtract 20 percent of the rent collected from the tax claimed for credit. Second, reduce the tax claimed for credit by the amount of tax claimed as rental expense on your U.S. Form 1040.
Farmers
Include farmland taxes in your property tax credit claim if any of the following conditions apply:
- If your gross receipts from farming are greater than your household income, you may claim all of your farmland taxes including taxes on unoccupied farmland. Do not include taxes on farmland that is not adjacent or contiguous to your home and that you rent or lease to another person.
- If gross receipts from farming are less than your household income and you have lived in your home more than ten years, you may claim the taxes on your home and the farmland adjacent and contiguous to your home.
- If gross receipts from farming are less than your household income and you have lived in your home less than ten years, you may claim the taxes on your home and five acres of farmland
adjacent and contiguous to your home.
You may not claim rent paid for vacant farmland when computing your property tax credit claim. Include any farmland preservation tax credit in your household income. Enter the amount of credit you received in 2009 on line 17 or include it in net farm income on line 15. Homestead property tax credits are not included in household income. If you included this amount in your taxable farm income, subtract it from household income.