Tax Alert

Michigan Tentatively Adopts Phase Out of Personal Property Tax on Industrial and Commercial Equipment

(Jan. 9, 2013)


Michigan recently passed legislation that substantially reforms the assessment of the personal property tax on industrial and commercial equipment. The changes will go into effect only if a statewide referendum approving local government funding is approved by Michigan voters in August 2014.

Multiple exemptions apply to eligible manufacturing personal property, which refers to all personal property located on real property where that personal property is used more than 50 percent of the time in industrial processing or in direct integrated support of manufacturing. The definition is based on how the property is used rather than its classification. As a result, it could include commercial personal property and industrial personal property.

The legislation sets forth the following two exemptions, which are contingent upon the property owner providing the appropriate affidavits to the local tax collecting authorities.

  • Beginning with the Dec. 31, 2015, assessment date, new eligible manufacturing personal property purchased on or after Jan. 1, 2013, will be exempt from property tax.
  • Beginning with the Dec. 31, 2015, assessment date, eligible manufacturing personal property that is at least 10 years old and was subject to property tax in Michigan, or would have been subject to property tax in Michigan had the property not been located out of state, will be exempt from tax. Each year through 2022 another year of property will become eligible for the used property exemption, and beginning in 2022 all eligible manufacturing personal property will be exempt from tax.

The legislation also includes the following:

  • An additional exclusion within a jurisdiction for owners of industrial personal property or commercial personal property if the combined taxable value of property in the jurisdiction is less than $40,000 for the Dec. 31, 2013, assessment date.

Some manufacturing property is subject to tax under the industrial facilities tax or technology park facilities tax. These properties will remain subject to those taxes until the property qualifies for the exemption for property more than 10 years old.

 

For More Information
Dean Uminski
574.239.7865
dean.uminski@crowehorwath.com

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