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Michigan Property Tax Updates

UPDATED december 2023

Transfer of Ownership Definition Expanded

A recent ruling from the Michigan Court of Appeals could cause significant property tax increases for property owned by limited liability companies, corporations, partnerships and other legal entities.

Generally in Michigan, the annual increase in a tax parcel’s taxable value is capped to the lesser of inflation or 5% each year until there is a “transfer of ownership,” which is statutorily defined to include the transfer of over 50% of the ownership interest in a legal entity that owns property.   

In Resort Properties Co-Operative v Waterloo Twp, ___ Mich App ___; ___ NW2d ___ (2023) (Docket No. 364744), minority shareholders who owned 24% of the share in a corporation purchased an additional 48% of the shares and then subsequently sold 20% of the shares in a calendar year.  The assessor believed that these transfers constituted a transfer of more than 50%, and “uncapped” the property’s taxable value resulting in higher taxes.  An appeal ensued, arguing that there was not a “transfer of ownership” because original entity ownership of 52% did not change.  The Court agreed with the assessor, holding that adding together the transferred shares, totaled over 50% and therefore there was a transfer of ownership.  So, even though the purchase of the 48% interest was not a “transfer of ownership” the second 20% transfer of some of those shares caused a taxable value uncapping. 

While the the normal public trading of stock of a corporation does not constitute a transfer of ownership, this decision means the owners of minority interests can cause taxable value uncappings to occur.

Stewart L. Mandell
Honigman LLP
American Property Tax Counsel (APTC)

Deadlines to File for Exemptions and Appeals

There have been several appellate court decisions this year underscoring the need for property owners to carefully abide by filing deadlines or risk denial or dismissal.    The latest case, Proquest, LLC v Township of Ypsilanti, unpublished per curiam opinion of the Court of Appeals, issued November 30, 2023 (Docket No. 362977) involved a taxpayer who mailed its claim for the Eligible Manufacturing Personal Property Exemption (EMPP) via USPS.   The form was postmarked before the statutory deadline but was ultimately returned to the taxpayer for inadequate postage.    By the time the form was resubmitted, the Township’s Board of Review had adjourned and the assessor claimed to have no way of granting the exemption.   On appeal, the Tax Tribunal and Court of Appeals agreed that the postmark date of the form only applies if the form is actually delivered to the assessor. 

This decision prompts the question of what happens if a filing is “lost in the mail”, and illustrates the importance of being able to track and verify important Michigan property tax filings.

Stewart L. Mandell
Honigman LLP
American Property Tax Counsel (APTC)

2024 Assessments

For 2024, the Proposal A property tax inflation cap is 5%.   Except for parcels that transferred during 2023, the taxable value for each parcel of property, excluding “additions”, may not increase greater that 5% for the 2024 tax year.  Generally, 2024 assessments will be established during the first quarter.

For Michigan properties that the assessors have classified as commercial real or industrial real, the 2024 appeal deadline is May 31.   Property owners concerned about their property taxation, whether because of a valuation, exemption or other issue, should confer with their property tax counsel as soon as possible in 2024. 

Stewart L. Mandell
Honigman LLP
American Property Tax Counsel (APTC)

Massachusetts Property Tax Updates
Minnesota Property Tax Updates

American Property Tax Counsel

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