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Feb 2019
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February 20, 2019

Commercial and Industrial Real Property Tax Appeals

It is that time of year to pay attention to the Notice of Assessment, Taxable Valuation and Property Classification that all real estate owners will receive soon from the local taxing authority. A statement in capitalized letters reading THIS IS NOT A TAX BILL will be at the top of the notice. While you may be tempted to throw this away, don’t. Rather, you should analyze this notice carefully because it lists several important categories:
 
  • Your property’s Taxable Value (TV);
  • Your property’s State Equalized Value/Assessed Value (SEV/AV); and
  • The increase in these values in comparison to last year.  
 
The TV is the number on which your property’s taxes are based. In the year immediately following a transfer of ownership, the TV will be the same as the SEV/AV. Until the property is transferred again, the TV can only go up in subsequent years based on 5% or the inflation rate, whichever is less, and adjusted for additions or losses to the property. 
 
The SEV/AV should be 50% of the property’s True Cash Value (TCV). The TCV is generally the usual selling price or fair market value of the property as of December 31 of the prior year as determined by any method recognized as accurate and reasonably related to market value. 
 
If you believe your property’s TCV is less than twice the TV, you may have a suitable valuation appeal. But, don't wait until you receive your summer tax bill because then it's too late. To properly appeal the property’s valuation, you must adhere to the strict statutory deadlines which govern such appeals. For owners of commercial or industrial properties, there is no requirement to attend the March Board of Review as with residential or agricultural property. Rather, owners of commercial or industrial property must file an appeal with the Michigan Tax Tribunal on or before May 31. If an appeal is not filed by that date, you will lose your opportunity to challenge the assessment for that year.
 
Remember, Proposal A, which was adopted by the voters in 1994, caps the TV of the property (subject to the increases described above) for as long as you own the property. Thus, reducing your taxable value through a properly perfected tax appeal now, even by a relatively small amount, could provide a nice annuity for you in the future even if the real estate market continues to appreciate and your property’s TCV continues to go up.

If you have any questions concerning your Notice of Assessment or need assistance in determining whether you may have a suitable appeal, please contact Ralph Colasuonno or Chris Meyer, both members of the Real Estate Services Group at Warner Norcross + Judd. 

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