4579: Qualified Affordable Housing Seller's Deduction (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Michigan Form 4579 calculates the Michigan Business Tax seller’s deduction for the sale of residential rental units to a qualified affordable housing project. It reports the sale gain and the share of units committed to rent restrictions, and establishes the maximum amount the bu
Who files this form
Form 4579 is for Michigan Business Tax (MBT) sellers claiming the qualified affordable housing seller’s deduction for a qualifying sale of residential rental units.
The buyer must be a qualified affordable housing project. The seller and buyer must enter into an operation agreement requiring the buyer to operate a specified number of the units as rent restricted units for at least 15 years.
Only taxpayers with an awarded certificated credit that has not been fully claimed or used may elect to be MBT taxpayers. Filing an MBT return and claiming a certificated credit commits the taxpayer to filing and paying under the MBT until that credit and its carryforward are exhausted.
Unitary business groups must complete a separate Form 4579 for each member to whom the schedule applies.
What you'll need
Have these documents and details ready for the 2024 form:
- The buyer’s operation agreement. A copy must be attached with Form 4579 to the seller’s MBT Annual Return, Form 4567.
- The seller’s federal tax return information showing the gain from the sale for the period.
- Seller and buyer names and FEINs or TR numbers.
- The property’s street address and property tax parcel identification number.
- The total number of residential rental units and the number the buyer committed to operate as rent restricted units.
- For the first year of an installment sale, the total gain over the life of the installment note.
- Authorized seller and buyer signatures, printed names, dates, titles, and telephone numbers.
For a unitary business group, also provide the designated member’s name and the reporting member’s name and account number.
How to file
Attach the completed Form 4579 and a copy of the buyer’s operation agreement to the seller’s MBT Annual Return, Form 4567. The seller must obtain the buyer’s signature, and both parties must complete their certifications.
To calculate the deduction:
- Enter the gain reported on the seller’s federal tax return for the period on line 1.
- Divide the number of units committed to rent restricted operation on line 2 by the total residential rental units on line 3. Enter the percentage on line 4.
- Multiply line 1 by line 4 and enter the deduction on line 5.
- Carry line 5 to Form 4567, line 48i. For a unitary business group, carry it instead to Form 4580, Part 2A, line 45i.
Complete Part 4 only in the first year of an installment sale.
The supplied text does not specify a mailing address or e-filing method.
Common mistakes
- Missing the buyer’s signature or operation agreement. The form specifically reminds the seller to obtain the buyer’s signature and attach both Form 4579 and a copy of the agreement to Form 4567.
- Completing Part 4 in the wrong year. The form says to complete this part only in the first year of an installment sale.
- Overlooking the MBT election restriction. The instructions remind taxpayers that only those with an awarded certificated credit that is not yet fully claimed or used may elect to be MBT taxpayers.
Questions people ask
Can the seller claim a deduction if only some units will be rent restricted?
Yes. The deduction is limited to the gain multiplied by the number of units committed to rent restricted operation divided by the total number of residential rental units sold.
How are installment sales handled?
The gain, or a proportional amount of it, may be deducted over time using the installment method if that treatment is consistent with the seller’s federal income tax treatment. Treasury files the lien in the initial year for the full amount of the cumulative deductions.
Will Treasury place a lien on the property?
Yes. Treasury records a lien for the maximum seller’s deduction and maintains it for 15 years to secure payment if recapture occurs.
What happens if the buyer breaks the operation agreement?
If the buyer fails to qualify or fails to operate even one unit as required within 15 years after purchase, a proportionate amount is added to the buyer’s tax liability for the year of the recapture event. The buyer reports recapture on Form 4587, even if it does not meet the MBT gross receipts filing threshold.