Assessments cannot follow sales. If you have ever attempted to appeal or renegotiate your property tax assessment following a recent purchase of real estate, you most likely have heard this phrase. It is a favorite, yet often misunderstood, retort of local property tax assessors. What does this really mean? Years ago some assessors would automatically reassess a property following a sale, and use the sales price as the new assessed value.
The general rule is that property in Michigan is assessed at 50% of the True Cash Value (i.e., fair market value). TCV is the value determined between a willing buyer and a willing seller, and thus assessing property based upon sales price, seems appropriate. However, the Property Tax Act states that “the purchase price paid in a transfer of property is not the presumptive True Cash Value of the property transferred.” The reasoning is that the sales price might be artificially higher or lower than market value, if, for instance, the seller and buyer are related, there was a second transaction allocating some value to other property or services, or if the seller was subject to undue distress impacting the value. This does not mean that the purchase price cannot be considered. In fact, the sales price is and should be a primary factor considered in determining True Cash Value if you can determine that the sales price was not impacted by these outside factors. Were the buyer and seller at “arms-length”? Were they both represented by realtors? Can we verify if there were related transactions or distress on the sale?
You will shortly receive your 2017 real property tax Notice of Assessment from the local assessor. Some Michigan communities and properties are still being assessed at above market rates. When you receive your Notice compare the “Assessed Value” to 50% of the purchase price.
If your property taxes have not been appealed in the last five years or you have recently purchased property, there may be an opportunity to reduce your property tax expense.
The deadline to file a tax appeal to the Michigan Tax Tribunal on Industrial or Commercial real property is May 31, 2017 (July 31st for Residential). Get a free review to determine whether an appeal of your Industrial or Commercial property would be advantageous. Want to review your planning options? Contact me NOW. My initial analysis will be completed without charge or risk to you.
Kemp Klein’s tax team represents clients that own or lease industrial or commercial real property, which includes commercial, retail including grocery, office space, engineering, manufacturing, warehousing, assisted and independent living facilities, and small business. We also represent clients in appeals of changes in the classification of real estate and for denials property as exempt from tax as charitable use property for nonprofit businesses.
Mr. Cnudde and the Kemp Klein tax team have successfully resolved countless commercial and industrial property tax appeals. Mr. Cnudde is a DBusiness Top Lawyer for Tax Law and Non-Profit/Charities; has received an AV rating from Martindale-Hubbell Law Directory (the highest peer review rating for attorneys); has a certification in tax law; and a certification from the National Institute of Trial Advocacy (NITA). Mr. Cnudde has been recognized as one of Michigan’s outstanding young lawyers in the area of Mergers & Acquisitions in 2013 – 2017 with a “Rising Star” designation by Michigan Super Lawyers magazine.
To obtain your free consultation on your tax appeal opportunities complete the Property Tax Appeal Questionnaire below and return it to Mr. Cnudde at 201 W. Big Beaver Rd, Ste. 600, Troy, MI 48084 today. To view a full compendium of articles on how we can help reduce your property tax costs, go to https://kkue.com/property-tax-appeal/.
For further information regarding these matters, please contact Mr. Cnudde at 248.528.5678 or via email.