HOUSE BILL NO. 5177

June 29, 2021, Introduced by Reps. Bolden and Weiss and referred to the Committee on Tax Policy.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.713) by adding section 277.

the people of the state of michigan enact:

Sec. 277. (1) Subject to the limitations under this section, for tax years that begin on and after January 1, 2021 and before January 1, 2026, a taxpayer that purchases a qualified principal residence or retrofits or hires someone to retrofit the taxpayer's principal residence, provided that the retrofitting of the taxpayer's principal residence is designed to improve accessibility or provide visitability, may claim a credit against the tax imposed by this part in an amount equal to 4.0% of the total purchase price paid for the qualified principal residence or 50% of the total amount spent for the retrofitting of the taxpayer's principal residence. The amount of the credit allowed under this section shall not exceed $5,000.00 for the purchase of a principal residence or for the retrofitting of a principal residence. A taxpayer shall not claim more than 1 credit for the same principal residence.

(2) To qualify for the credit under this section, a taxpayer shall request certification from the Michigan state housing development authority in a form and manner as prescribed by the Michigan state housing development authority no later than January 10 of the tax year immediately succeeding the tax year for which the credit is to be claimed. The Michigan state housing development authority shall approve or deny all requests for certification and issue the certificates no later than February 10 of the same tax year. A taxpayer shall not claim a credit under this section unless the Michigan state housing development authority has issued a certificate to the taxpayer. The taxpayer shall attach the certificate to the annual return filed under this part on which a credit under this section is claimed. The certificate required under this subsection shall specify all of the following:

(a) The name of the taxpayer and the address of the qualified principal residence.

(b) The purchase price of the qualified principal residence or the total amount expended to retrofit the taxpayer's principal residence into a qualified principal residence during the tax year by the taxpayer.

(c) The total amount of the credit under this section that the taxpayer is allowed to claim for the tax year.

(3) The total amount of credits that the Michigan state housing development authority may certify under this section shall not exceed $1,000,000.00 in any 1 tax year. Except as otherwise provided under this subsection, each year the Michigan state housing development authority shall allocate $500,000.00 in credits for the purchase of qualified principal residences and $500,000.00 in credits for the retrofitting of principal residences. If the amount of tax credits approved in a single tax year for the purchase of qualified principal residences is less than $500,000.00, the director of the Michigan state housing development authority shall allocate the remaining balance of those tax credits for the retrofitting of principal residences. If the amount of tax credits approved in a single tax year for the retrofitting of principal residences is less than $500,000.00, the director of the Michigan state housing development authority shall allocate the remaining balance of those tax credits for the purchase of qualified principal residences. In the event that the requests for certification for the tax credit exceed the amount allocated by the director for that tax year, the Michigan state housing development authority shall issue the tax credits pro rata based upon the amount of tax credits approved for each taxpayer and the amount of tax credits allocated by the director.

(4) The taxpayer shall claim the credit under this section for the same tax year in which the qualified principal residence was purchased or that the retrofitting of the taxpayer's principal residence was completed. If the amount of the credit allowed under this section exceeds the tax liability of the taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year shall not be refunded but may be carried forward to offset tax liability under this part in subsequent tax years for a period not to exceed 7 tax years or until used up, whichever occurs first.

(5) As used in this section:

(a) "Accessibility" means that the principal residence is designed to provide the taxpayer or an individual who is related to the taxpayer or who resides with the taxpayer, who has 1 or more physical limitations in daily life activities as verified by that individual's physician, with the ability to enter, exit, and use the property with and without assistance. For purposes of this subdivision, an individual is related to the taxpayer if that individual is a spouse, brother or sister, whether of the whole or half blood or by adoption, ancestor, or lineal descendant of that individual or related person.

(b) "Michigan state housing development authority" means the authority created under the state housing development authority act of 1966, 1966 PA 346, MCL 125.1401 to 125.1499c.

(c) "Physician" means that term defined under section 17001 or 17501 of the public health code, 1978 PA 368, MCL 333.17001 and 333.17501.

(d) "Principal residence" means property exempt as a principal residence under section 7cc of the general property tax act, 1893 PA 206, MCL 211.7cc.

(e) "Qualified principal residence" means a principal residence that is designed to improve accessibility or provide visitability.

(f) "Visitability" means a principal residence designed to include all of the following:

(i) At least 1 zero-step entrance.

(ii) At least 1 full or half bathroom on the main floor.

(iii) All doorways on the main floor have a minimum of 32 inches of clear passage space.