Quality Forest Program - Tax On Structures

Asked March 15, 2019, 5:49 PM EDT

After enrolling 239 acres (39, 40, 40, 40 and 80 ac connected parcels) in the QFP program, the Mecosta County, Chippewa Township Assessor created a new tax id and parcel description to exclude the cabin and garage from the program. But then the assessor assigned a taxable/assessed value of $83k to this property, plus another 83 to the 40ac. The 239 acres with cabin and garage were purchased for 470k in 2015. The property was enrolled in the program in 2017. The tax bill in 2019 reflexed the change. In essence the tax assessor uncapped and reassessed the property at $100k over the original purchase price of 470k. This basically eliminates any tax benefit... We took the tax bills and appealed and were denied by the assessor. This is not how the program was portrayed from USDA. Property owners should be made aware that these small townships are finding loop holes in the program to recapture the 18mil school tax savings and that this program will cost them more money and cause them more problems then its worth. Yes we are going to take this to the tax tribunal, but I have come to learn that the process at the level costs money and could take upwards of 2 1/2 years. When purchase this was an arms lenght transaction, fair market sale. The hunting cabin and garage had little value as there is know electrical power to the property, this is strickly a hunting camp located off a seasonal two track road. The assessed value of abuting 100 acre property is 100k. Hunting land value has not gone up in this area, if anyting it is going down. This assessor has basically reassigned a new value to the property to recaputure the savings. The total assessment on the 239 acres should be 235k.. Am I missing something or is this Tyranny at its best...

Mecosta County Michigan forestry local government property tax

1 Response

The following appears to be the points of the question.

Subject is a total of 239 acres in five separate but “connected” parcels.

Acreage sizes are parcels of 39, 40, 40, 40, and 80.

Subject property was purchased in 2015 for $470,000.

All 239 acres were enrolled in the Qualified Forest Program in 2017.

Township Assessor created a new parcel number for the cabin and garage to remove the buildings from the program. “But then the assessor assigned a taxable/assessed value of $83k to this property, plus another 83 to the 40ac.”

“The tax bill in 2019 reflexed the change”

I will assume from the question that all five (5) parcels are separate parcels with their own parcel numbers. As such, all five (5) parcels would be valued individually based upon their own characteristics for each annual assessment roll.

As required by the General Property Tax Act, Public Act 206 of 1893 as amended, a local assessor is required to prepare an annual assessment roll and determine the true cash value, state equalized value, etc. each and every year. Property values can and many do change on an annual basis. They are based upon market data collected and analyzed by the local unit in addition to the procedures of the General Property Tax Act and guidance to assessment administration provided by the Michigan State Tax Commission.

The sale price noted was in 2015. It will have limited weight if any for 2018 or 2019 property values. Michigan Complied Laws (MCL) 211.27 provides the standard for determining true cash value. Here section 1 provides that:

“As used in this act, "true cash value" means the usual selling price at the place where the property to which the term is applied is at the time of assessment, being the price that could be obtained for the property at private sale, and not at auction sale except as otherwise provided in this section, or at forced sale. …”

Additionally, an assessing officer cannot simply take the sale price and use it as the property’s true cash value. At MCL 211.27 Section 6,

“… the purchase price paid in a transfer of property is not the presumptive true cash value of the property transferred. In determining the true cash value of transferred property, an assessing officer shall assess that property using the same valuation method used to value all other property of that same classification in the assessing jurisdiction.”

In the case of the subject property, all five (5) parcels may have been obtained in a single purchase but they are not a single parcel. Each parcel will be assessed individually. The sum of the individual parcels can and in many cases will exceed the value of 239 acres if valued as a single parcel. Since this is not a single parcel but five parcels, the assessor is required to value all five individually.

As to the assessor breaking out the cabin and garage and creating a new parcel number for them, this is correct procedure. The following is quoted from the April 8, 2014 Memo from Executive Director to the members of the State Tax Commission on the subject of Qualified Forest.

“Changes to the Qualified Forest Act which took effect with the passage of Public Act 42 of 2013 now allow parcels to qualify for the exemption if they have structures or buildings on the parcels. However, those structures or buildings are not eligible for the exemption. (emphasis added)

The Commission was recently contacted by the Michigan Department of Agriculture and Rural Development regarding how assessors should treat these structures or buildings on Qualified Forest Properties to ensure uniform property valuation. …

The State Tax Commission recommends that when dealing with Qualified Forest Properties with structures or buildings, assessors should establish separate parcel numbers for the land and separate parcel numbers for the buildings. This will allow for exemption of the land and proper taxation of the structures or buildings. Assessors are advised that one acre of land should be assigned to the parcel with the structures or buildings. This new parcel number for the buildings is for assessing and taxation purposes only and would not constitute a split of the parcel. (emphasis added)”

I do not understand the comment, “The tax bill in 2019 reflexed the change”. Currently, as of March 2019, there are no 2019 tax bills. Tax bills are issued in July and December. Is this a typo and the correct year of the comment is 2018?

As every parcel of property is assessed each and every year as required by state statute, values can change on an annual basis. Such a change has nothing to do with whether a property has some form of tax break or exemption.

Value appeals are made each year to the March Board of Review if an owner disagrees with the assessment. As you note, further appeals may be made to the Michigan Tax Tribunal (MTT). While the tribunal does have filing fees, costs are minimum unless a person decides to hire an attorney or other professional to represent them. In many ways, the tribunal was designed to allow the individual property owner to present their own case. While at one point in time, there was a multi-year wait to be heard due to the backlog of cases on the MTT docket, in the recent past, my experience was that cases were generally heard with one year from their filing.