By Peter G. Pupke, Esq., Checkpoint News
Michigan has enacted legislation that allows eligible taxpayers to claim a housing opportunity credit against the individual or corporate income tax, effective for tax years beginning on and after January 1, 2027. (L. 2026, H5806 (P.A. 30), effective for tax years beginning on and after 01/01/2027.)
Housing Opportunity Tax Credit
The bill creates a new “Housing Opportunity Tax Credit” available against both the individual income tax and the corporate income tax. The credit is for qualified housing projects, and the amount is determined by the Michigan State Housing Development Authority (MSHDA) via an allocation report. The credit is nonrefundable, but excess credit may be carried forward for up to 10 years. Recapture of the state credit is required if the corresponding federal low-income housing tax credit for the same project is recaptured.
Qualified taxpayer
A “qualified taxpayer” means any of the following: (1) a taxpayer that is the owner of a qualified project and has received an eligibility statement for that qualified project; (2) a taxpayer that is the owner of a qualified project that received an approval notice and has submitted a final cost certification and a request for an eligibility statement to the authority but the authority has not yet approved the final cost certification and issued the eligibility statement to the owner; or (3) a taxpayer that owns a direct or indirect, through one or more other flow-through entities, interest in an owner described under (1) or (2) and that has been allocated a housing opportunity tax credit at any time prior to filing an annual or amended return on which a housing opportunity tax credit is claimed.
Claiming credit
To claim the credit, the qualified taxpayer must attach a copy of the eligibility statement to the annual return filed under this part on which the credit is claimed. However, if the owner of the qualified project that has received an approval notice has submitted a final cost certification and a request for an eligibility statement to the authority but the authority has not yet approved the final cost certification and issued the eligibility statement to the owner, the qualified taxpayer may either claim the housing opportunity tax credit on the qualified taxpayer’s annual return for the tax year by attaching a copy of the approval notice for that qualified project or wait to claim the credit on the qualified taxpayer’s annual return for the qualified taxpayer’s tax year in which the eligibility statement for the qualified project is issued.
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