Homestead Property Tax Credit Expanded
Public Act 273 of 2011 (H.B. 4990), effective January 1, 2012 expands the homestead property tax credit available against the Michigan personal income tax so that the portion of real property that is unoccupied and classified as agricultural for real property tax purposes is excluded from the taxable value of the homestead. An owner is not eligible for the credit if the taxable value of the homestead is greater than $135,000. Previously, the statute did not exclude the value of the unoccupied, agricultural property.
Personal Income Tax Deduction Re-Enacted for a Resident of a Renaissance Zone
Public Act 314 of 2011 (S.B. 748), effective January 1, 2012 and Public Act 315 (H.B. 5157), effective December 27, 2011 reinstate the Renaissance Zone personal income tax deduction for a taxpayer who resides in a Renaissance Zone for at least 183 consecutive days, and the taxpayer's gross income does not exceed $1 million.
A Renaissance Zone deduction from the Michigan personal income tax is re-enacted. Michigan law had contained a Renaissance Zone deduction from the personal income tax. It was repealed along with other provisions as part of the 2011 tax reform legislation. That legislation revised aspects of the personal income tax and enacted the corporate income tax.
To the extent included in gross income, a qualified taxpayer may deduct the sum of:
· income earned or received during the time that the taxpayer was a resident of the Renaissance Zone;
· interest and dividends received;
· capital gains received, prorated based on the percentage of time that the asset was held while the taxpayer was an Renaissance Zone resident; and
· income received from winning an online lottery game sponsored by Michigan if the date of the drawing was after the taxpayer became a Renaissance Zone resident.
The income used to calculate another deduction cannot be used to calculate the Renaissance Zone deduction as well. The net operating loss deduction is figured without regard to the Renaissance Zone deduction. Income from illegal activity cannot be used to compute the Renaissance Zone deduction.
If the taxpayer changes residency into or out of a Renaissance Zone during the tax year, the income subject to tax is determined separately for the time while a Renaissance Zone resident and while not a Renaissance Zone resident. The Renaissance Zone must have been designated as such before 2012.