Skip Navigation
Michigan TaxesMichigan.gov, Official Portal for the State of Michigan
Michigan.gov Home
close print view
FAQ
  Michigan Business Tax
Mi29. Are condominium, homeowners, and timeshare associations taxed under IRC 528 or IRC 277 exempt from the MBT?
 
Answer:

Under the MBT, relevant exemptions include:

A person who is exempt from federal income tax under the internal revenue code... except the following:
* * *

(iii) The tax base attributable to the activities giving rise to the unrelated taxable business income of an exempt person. [MCL 208.1207(b).]

Under IRC 528, qualified condominium management, residential real estate management, and timeshare associations are exempt from federal income tax on their exempt function income for each year in which the taxpayer makes the proper election under IRC 528(c)(1)(E). Thus, condominium management, residential real estate management, and timeshare associations taxable under IRC 528 are generally exempt from the MBT under MCL 208.1207(b). However, condominium management, residential real estate management, or timeshare associations are subject to the MBT on any taxable income under IRC 528 – or if such associations decline to make the IRC 528(c)(1)(E) election.

In contrast, by definition, organizations subject to tax under IRC 277 are not exempt from federal income tax under the IRC. IRC 277(a). Thus, organizations subject to tax under IRC 277 are not exempt from the MBT.

The exemption language governing condominium, homeowners, and timeshare associations under the MBT is essentially identical to that used in the SBT. In other words, to the extent an association taxed under IRC 528 was exempt from the SBT, that taxpayer is likely exempt under the MBT as well.


Michigan Business One Stop
Link to Department and Agencies Web Site Index
Link to Statewide Online Services Index
Link to Statewide Web-based Surveys
Link to RSS feeds available on this site
FAQ Categories
 •  Index of Tax FAQ's
 •  Individual Income Tax
 •  Business Taxes
 •  1099-MISC Filing Requirements
 •  Collections/Delinquent Accounts
 •  Tax Increment Financing
 •  Service Fee/PILOT Housing
 •  State Real Estate Transfer Tax
 •  Native American
 •  Michigan Business Tax
 •  Status of Individual Refund
 •  Health Insurance Claims Assessment (HICA) Act
 •  Energy Home Improvement Credit
 •  Corporate Income Tax
QR code

Michigan.gov Home
PoliciesMichigan NewsMichigan.gov Survey

Copyright © 2014 State of Michigan