Michigan's Farmland Preservation Tax Credit provides property tax relief to eligible taxpayers who own farmland that is covered by a qualifying Farmland Development Rights Agreement. The credit is claimed on Form MI-1040CR-5, Farmland Preservation Tax Credit Claim and may reduce your Michigan tax liability or increase your refund.
Program Entry
Michigan Return → Credits → Farmland Preservation Tax Credit Claim (MI-1040CR-5)
Who Qualifies for the Farmland Preservation Tax Credit?
Before claiming the credit, you must first complete one of the following Michigan credit forms:
- MI-1040CR – Homestead Property Tax Credit Claim
- MI-1040CR-2 – Homestead Property Tax Credit Claim for Veterans and Blind People
- MI-1040CR-7 – Home Heating Credit Claim
If you qualify for the Farmland Preservation Tax Credit, select Yes when prompted. If you do not qualify, select No.
Keep in mind that farmers generally calculate their property tax credit on MI-1040CR and compare available credits to determine which provides the greater benefit.
Homestead Property Taxes Not Included on Schedule CR-5
You will be asked:
Are all taxes that qualify for a Homestead Property Tax Credit included in the total taxes for all agreements reported on Schedule CR-5?
- Select Yes if all eligible property taxes are included in Schedule CR-5.
- Select No if some qualifying taxes on your home or farmland are not covered by a Farmland Development Rights Agreement.
If you answer No, enter the qualifying property taxes that are not associated with a preservation agreement.
Depletion Allowance Claimed on Your Federal Return
Enter any depletion allowance deducted on your federal return.
This amount may affect household income calculations used in determining the allowable credit.
Common examples include depletion deductions related to:
- Oil and gas interests
- Mineral interests
- Other qualifying natural resource activities
Signed Distribution Statement for Joint Owners
If farmland is jointly owned with someone other than your spouse, you may need a signed distribution statement to allocate ownership and income among the owners.
Select Begin to enter the required information.
The statement may require:
- Joint owner's name
- County code
- Contract number
- Agreement expiration year
- Partner's Social Security number
- Percentage of income attributable to each owner
- Percentage of ownership attributable to each owner
Percent of Income
Enter each owner's share of income from the farmland agreement.
Examples:
- 100% = 100
- 50% = 50
- 25% = 25
Percent of Ownership
Enter each owner's ownership percentage in the farmland.
Examples:
- 100% ownership = 100
- 50% ownership = 50
The percentages entered should reflect the actual ownership arrangement for the agreement.
Schedule CR-5 – Schedule of Taxes and Allocation to Each Agreement
Do You Need to Complete Schedule CR-5?
Select Yes if you need to report one or more qualifying farmland agreements.
If information is entered on Schedule CR-5, this question must be answered Yes for the agreement information to be included in the credit calculation.
Entering Agreement Information
Select Begin next to Schedule of Taxes and Allocation to Each Agreement (Schedule CR-5) to enter information for each qualifying agreement.
Ownership Type
Choose the ownership type that applies to the agreement, such as:
- Individual ownership
- Joint ownership
- Partnership ownership
- Other ownership arrangements
County Code
Enter the county code associated with the agreement property.
Contract Number
Enter the contract number exactly as it appears on the Farmland Development Rights Agreement.
Agreement Expiration Year
Enter the year the preservation agreement expires.
Total Taxable Value
Enter the property's total taxable value as shown on the property tax statement.
Paid Tax Receipts
Indicate whether copies of applicable property tax receipts are attached.
Select:
- Yes if receipts are attached.
- No if receipts are not attached.
Percent of Income or Ownership
Enter the percentage of income or ownership attributable to the agreement.
Do not enter more than three decimal places.
Total Tax for Each Agreement
Enter the total property tax associated with the agreement. This amount is used when calculating the credit.
How Does the Farmland Preservation Tax Credit Affect My Return?
The credit may:
- Reduce your Michigan income tax liability.
- Increase your Michigan refund.
- Provide property tax relief for farmland protected under qualifying preservation agreements.
Important Reminders
- You must complete MI-1040CR, MI-1040CR-2, or MI-1040CR-7 before claiming the Farmland Preservation Tax Credit.
- Schedule CR-5 must be completed separately for each qualifying agreement.
- Joint owners may be required to complete a Signed Distribution Statement.
- Keep copies of property tax bills, paid tax receipts, preservation agreements, and other supporting records with your tax documents.
- Information entered on Schedule CR-5 should match the information shown on your farmland agreement and property tax records.
- When filing, attach MI-1040CR-5 and Schedule CR-5 with your Michigan return as required. The Michigan instructions specifically list these forms as supporting attachments when claiming the credit. Why Documentation Matters
Michigan may request supporting documentation to verify your claim. Maintaining complete records of ownership, property taxes, agreement numbers, allocation percentages, and tax receipts can help avoid delays in processing your credit claim.
For qualifying farmland owners, the Farmland Preservation Tax Credit can be a valuable benefit that helps offset property taxes while supporting long-term farmland preservation in Michigan.