In some circumstances, one spouse maintains a principal residence in Michigan while the other spouse actually lives most of the time in a residence owned by that spouse in another state. This could be for many different reasons. For example, one spouse might be retired and already living in the couple’s planned retirement home in another state while the other spouse still has employment obligations in Michigan. Whatever the reasons, can the Michigan spouse claim a principal residence exemption with respect to the Michigan residence?
The answer depends on two things: whether a similar exemption is claimed in another state and whether joint or separate income tax returns are filed. If the non-Michigan spouse does not claim a similar exemption in the other state, the couple can validly claim the Michigan exemption. If the non-Michigan spouse claims a similar exemption in the other state, then the Michigan spouse cannot claim the exemption in Michigan if the couple files joint income tax returns.
While this rule may, in some instances, seem like form over substance, the requirement that they file separate income tax returns is specifically set forth in the statutory language establishing the Michigan exemption found under MCL 211.7cc. Therefore, couples with residences and exemptions in both states should weigh any disadvantage of filing separately against the advantage of taking the exemption in Michigan and the other state.