Have a question about Real Property? These past Tony’s Tips will help!
March 11, 2019
REVIEW NOW, BEFORE IT’S TOO LATE
Sometime in February, your local Michigan assessing unit (township, city, or village) will have sent your real property assessment notices. It is imperative you review this information, as any errors are much more easily addressed now at your local Board of Review, as opposed to when you receive your tax bill.
In order to not miss out on any tax reduction opportunities you need to:
- Verify that you received all the notices for each of your locations.
- Look for any assessments that have increased more than 1.024% in taxable value. That is the maximum limit for 2019 inflation rate, based on the 2018 CPI. Unless you have new construction or previously unreported real property improvements, your taxable value may only be increases by this amount.
- Watch for any abatements that may have expired. Even though the total assessed value for the abated parcel and the ad valorem parcel have not changed, your taxes may go up dramatically based on the change in tax rates.
If you have any questions or just don’t have the time to document these areas, contact a property tax professional for help.
Most Boards of Review meet THIS WEEK, so time is of the essence.
IF YOU WAIT UNTIL THE TAX BILLS COME OUT IN JUNE TO EXAMINE YOUR TAX BASIS, IT IS TOO LATE!
December 13, 2018
REAL PROPERTY TAX CHECK LIST
Once a year, it is important to review the status of your real property, to ensure it’s assessment and subsequent tax liability are fair and equitable. Below is a check list you can utilize to ensure your firm’s real property holdings are good-to-go for 2019:
- List all property locations and match up to assessment notices/tax bills.
- Sort tax liabilities in descending order per state and/or taxing unit.
- Monitor changes in value as soon as notices are received. Assessments that increased more than 15% need to be culled out and handed to a valuation specialist to question the change in value prior to the appeal deadline (too often these increases do not stand out until tax bills come out and then it is too late!).
- Don’t file “blind appeals”. Assessors do not enjoy chasing rabbits down a hole only to find that your value may be understated.
- Pay your real property taxes on time! Besides interest and possible penalties being applied, in many states you lose the right to appeal the value on properties that are negligent in tax payment.
- Whenever time permits, contact the assessor and inform them of your concerns prior to filing an appeal. Many times they will accommodate you and make an adjustment based on Information or data supplied by you. Remember, they don’t like going to court either!
- If your research finds a marginal (less than 15%) disparity in value, stop by the assessor’s Office prior to the appeal deadline and if there is not time to resolve the issue, discuss filing a “Protective appeal” or ask if they will reconsider the value basis for the following tax year.
- If you find that you are behind in the entire process, pick out 20% of your top properties based on tax liabilities and ask a reputable tax consultant to do an in-house review and give you their recommendations.
September 7, 2018
DON’T MISS OUT ON THIS TAX SAVING OPPORTUNITY!
Our conservative state has a very liberal abatement policy! Most taxing jurisdictions offer anywhere from 1.5 to 2 %tax savings for every dollar spent over a 10 year period. That means that for every $1,000,000 that you spend, you will recoup $50,000 to $75,000 in tax benefits!
August 13, 2018
TRY THE INFORMAL APPROACH!
Most assessors do not appreciate an assessment being challenged just before the deadline to appeal. Rather than causing a stir, why not contact the assessor’s office and arrange a tour of your facility? Explain that you would like to discuss next year’s assessed value, and would like to gain an understanding of how your facility is assessed, so that you can feel the assessment is justified.
After meeting with your assessor, if you still have strong feelings about the property being over assessed, contact a reputable consulting firm and ask them to complete a market analysis. It shouldn’t cost much and should give you firm footing to approach the assessor on an informal basis to discuss your assessment. If the market analysis ends up justifying the assessment, you will at least feel more comfortable about it and get back to your real job!
June 11, 2018
NON-VALUE ADDED COSTS
It is required that you take out a permit before you build new or add on to your facility. These permits often include costs that misrepresent the value that would be attributed to the market place.
It is also necessary that you note the “total” costs when filling out an abatement application relating to constructing a new facility or building addition. The assessor often considers these costs prior to setting a value for the abated property.
Many costs do not add value and should be considered non-value added, even though they may be necessary to the construction project. Costs for relocating utilities and parking are a couple examples of non-value added costs.
We have found that assessors are more amenable to setting a fair value (without an appeal being filed) when you inform the assessor of these costs on the onset of the project.
Please check out our web site for other costs that should NOT be considered by the assessor when setting the property value.
May 7, 2018
APPEALING YOUR ASSESSMENT
It is not recommended that you file frivolous [without merit] appeals. Filing unwarranted appeals can cause friction between you and the assessment community. Not only does this cause ill will with the local governing unit, in some states it may even result in you being liable for all costs incurred by the taxing jurisdiction! See MTT Docket No. 15-002832; City of Royal Oak, respondent.
The recommended approach to proper real property assessment review is to start with a state certified general appraiser. Contract with this individual to complete a valuation analysis to compare with the value indicated by the assessment.
IF you find that the assessment appears fair or is even understated, you can at least feel confident that your company is being assessed fairly.
IF you find from this review that your assessment is overstated, arrange to meet informally with the assessor to review the appraisal and set up a tour of your facility at this time as well. DO NOT file an appeal without first trying the “informal approach.” This can result in better reductions at a lower out-of-pocket cost!
January 5, 2018
PLAN ON FILING ABATEMENTS IN INDIANA
If your plans for 2018 include adding new equipment, or even rebuilding the equipment you have, don’t miss out on the tax savings opportunity! In Indiana, the amount you spend completing those projects can be deducted from your assessment by utilizing an Economic Revitalization Area (ERA).
There are certain requirements, such as submitting a Statement of Benefits to the designating body in your area (such as the local redevelopment commission or the Economic Development Corporation) before any expenditures are made for your projects. The designating body can then establish an ERA, allowing you to claim those expenditures as a deduction on your personal property filings. You must claim this deduction before May 15 of the assessment year that your project was installed and/or fully functional.
Historically, designating bodies have been very generous in granting ERAs. I like to think of ERAs as a partnership between your business and the local community, where you are investing in each other. For example, every $500,000 you invest in your project – which can guarantee job retention, or even add employees – your firm’s tax savings will be approximately $20,000 over a 10-year period.
June 5, 2017
NEW OR REHAB?
One of Valu Tec’s major clients in the Grand Rapids, MI area recently added on to their corporate office building, and as part of the project they decided to upgrade their 1970’s vintage office space to match their new addition.
The expenditure was going to be more than the value attributed to the building according to the assessment in place. It was decided that we should file two abatements. One NEW for the additional space generated by the expansion (1\2 tax rate) and one REHAB (frozen assessment) for the remodeling of the original office structure.
The resulting tax savings was phenomenal for both abatements. The interesting thing was in the hearing the assessor mentioned in his 25 years of service he had never done a REHAB IFT abatement!
There are many things to consider when deciding if you should apply for a REHAB IFT abatement. For instance, is the value currently assessed the building improvements fair and reasonable? Determining the answer takes a professional analysis. Certain steps need to be taken in a timely fashion (some even before any construction begins) for everything to work out so that you receive the best tax benefit.
April 10, 2017
FRIVOLOUS TAX APPEALS CAN BE COSTLY!
According to a November 16, 2016 MTT decision, you can no longer file an appeal on your real property assessment without fear of repercussions if you later drop the appeal.
In years past, it has always been thought that you could file an appeal of a property’s value, and based on the result of informal or formal negotiations with the assessor, you could drop the appeal with no repercussions. This is no longer the case.
BEWARE! GET A REPUTABLE FIRM TO COMPLETE A PRELIMINARY VALUATION ANALYSIS BEFORE CONSIDERING A FORMAL APPEAL.