Property taxes are a major expense for business owners. They can also be a source of major headaches. Overvaluations cost commercial property owners thousands or even millions of dollars. With so much at stake, it’s well worth considering an appeal if you have reason to believe your property has been over-assessed.
Understanding the timeline
Commercial and industrial property tax assessments in Michigan are based on the State Equalized Value (SEV), which amounts to half of the property’s “true cash value” as of December 31 each year. “True cash value” means the amount the property would fetch in an arms-length transaction.
Michigan property owners receive assessment notices in February. The deadline for filing an appeal with the Michigan Tax Tribunal is May 31. That means you have only a few months to conduct the often complex analysis of whether to appeal.
When to consider an appeal
Any number of conditions may justify pursuing an appeal. Even if the assessment itself hasn’t increased, a challenge may still be warranted due to factors such as:
· Changes in income or expenses
· Depressed market conditions (as of December 31)
· Change in property classification
· Change in the property’s use or condition
· Lack of uniformity among assessments of similar properties
· Disputes over whether an “uncapping” transfer or sale occurred (which resets the SEV)
Valuing properties is not an exact science. There are multiple methods for conducting valuations, and appraisers often differ in their opinions and conclusions. Appeals often come down to the strength of expert evidence on each side.
Preparing a strong appeal takes time. Don’t wait until the deadline to start weighing this important decision.