Federal and state legislation may change property tax obligations in 2013

April 16, 2013 (Press-News.org) Federal and state legislation may change property tax obligations in 2013

Article provided by Randall P. Whately, PLLC
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Federal deduction for local property taxes in jeopardy

The mortgage interest deduction accounts for $90 billion in savings to taxpayers who deduct the interest on their homes. Taxpayers who itemize and deduct local property taxes collectively save approximately $20 billion every year. Every year, however, the U.S. Congress debates whether to eliminate these deductions in order to raise revenue. In 2012, that discussion was even more pronounced. It is not clear that either deduction will be saved and may disappear in the near future. This would likely reduce property values.

Michigan phases out personal property tax for businesses

Business leaders recently celebrated Michigan's passing legislation that will eliminate the personal property taxes on manufacturing equipment for businesses. On Friday, Dec. 14, Michigan decided to phase out the PPT in an attempt to spur commercial investment. In order to replace the income, Michigan will devote some of its 6 percent "use" tax and give it to local communities.

Supporters of the legislation believe that 100 percent of the lost revenue -- traditionally used to fund police, firefighters and jails -- will be replaced by local assessments on industrial properties that will increase revenue for cities. Voters will also have the chance in August, 2014 to approve the change in the "special use" tax, which would guarantee communities recoup 80 percent of lost revenue from the personal property tax elimination.

Property tax appeals

Budget concerns at the federal and state level can create confusion regarding property tax obligations. However, it is possible to appeal property tax assessments that are unfairly high. If the property is residential, Michigan's Tax Tribunal's Small Claims Division hears informal arguments that last approximately 30 minutes in the same county that assesses the tax.

For commercial and industrial properties, it depends on the value of the property. Non-residential property valued at less than $100,000 will also be resolved using an informal hearing. For any property valued above this amount, the Entire Tribunal will hear the case in a formal hearing. These more complicated cases can take several months to complete, although they often can be resolved in a matter of days.

An attorney can help

Local communities are struggling to meet budget concerns, and property taxes play a large role in how local governments are funded. Individuals and businesses who believe they have had property incorrectly assessed and are therefore paying too much in property taxes should consult with an attorney familiar with the tax property appeals process.