DesignInstance not working in VS2012

Question

I just spent several hours on an issue when using VS2012, WPF 4.5 and design-time data, specifically the DesignInstance attribute.

Goal: I wanted to

Answer 1

I've found that DesignInstance is not working in my .NET 3.5 and .NET 4.0 projects, whereas it works in >= .NET 4.5 project (the projects are the same, they share the same files by using links).