If I sold a house and moved to a rented home, what portion of the taxes levied may I claim?
If you sold your home, complete part 3 of the MI-1040CR to determine the taxes that may be claimed for credit. Use the taxes levied in the year of the claim. Prorate the taxes based on the number of days you owned and occupied the home as your principal residence. If you sold a home, you must include the capital gain from the sale of your home in total household resources even if the capital gain is not included in adjusted gross income.
For rent paid you must prorate based on the number of days of occupancy.
Note: The number of days used to prorate your credit may not exceed 365.
Bob and Susan sold their home October 2, 2020 and moved to an apartment where they paid $350 per month for the rest of the year. The annual taxes levied on the home were $1,860.
Step 1: Calculate the prorated property taxes levied for the 275 days they owned the home. Divide 275 by 365 to get a percentage of 75%. Multiply the annual taxes levied of $1,860 by 75% totaling $1,395 of prorated taxes.
275/365 = 75%
$1,860 x 75% = $1,395
Step 2: Calculate the prorated rent for the 91 days they rented the apartment. Multiply monthly rent $350 by 12 months for annual rent of $4,200. Divide 91 by 365 to get a percentage of 25%. Multiply the annual rent of $4,200 by 25% totaling $1,050 of prorated rent.
$350 x 12 = $4,200
91/365 = 25%
$4,200 x 25% = $1,050