Bill Text: MI HB4515 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Property tax; assessments; taxable value upon transfer of any real property; modify under certain circumstances for a period of time. Amends sec. 27a of 1893 PA 206 (MCL 211.27a).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-04-13 - Printed Bill Filed 04/13/2011 [HB4515 Detail]
Download: Michigan-2011-HB4515-Introduced.html
HOUSE BILL No. 4515
April 12, 2011, Introduced by Rep. Franz and referred to the Committee on Tax Policy.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 27a (MCL 211.27a), as amended by 2008 PA 506.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 27a. (1) Except as otherwise provided in this section,
property shall be assessed at 50% of its true cash value under
section 3 of article IX of the state constitution of 1963.
(2) Except as otherwise provided in subsection (3), for taxes
levied in 1995 and for each year after 1995, the taxable value of
each parcel of property is the lesser of the following:
(a) The property's taxable value in the immediately preceding
year minus any losses, multiplied by the lesser of 1.05 or the
inflation rate, plus all additions. For taxes levied in 1995, the
property's taxable value in the immediately preceding year is the
property's state equalized valuation in 1994.
(b) The property's current state equalized valuation.
(3) Upon a transfer of ownership of property after 1994, the
property's taxable value for the calendar year following the year
of the transfer is the property's state equalized valuation for the
calendar year following the transfer.
(4) If the taxable value of property is adjusted under
subsection (3), a subsequent increase in the property's taxable
value is subject to the limitation set forth in subsection (2)
until a subsequent transfer of ownership occurs. If the taxable
value of property is adjusted under subsection (3) and the assessor
determines that there had not been a transfer of ownership, the
taxable value of the property shall be adjusted at the July or
December board of review. Notwithstanding the limitation provided
in section 53b(1) on the number of years for which a correction may
be made, the July or December board of review may adjust the
taxable value of property under this subsection for the current
year and for the 3 immediately preceding calendar years. A
corrected tax bill shall be issued for each tax year for which the
taxable value is adjusted by the local tax collecting unit if the
local tax collecting unit has possession of the tax roll or by the
county treasurer if the county has possession of the tax roll. For
purposes of section 53b, an adjustment under this subsection shall
be considered the correction of a clerical error.
(5) Assessment of property, as required in this section and
section 27, is inapplicable to the assessment of property subject
to the levy of ad valorem taxes within voted tax limitation
increases to pay principal and interest on limited tax bonds issued
by any governmental unit, including a county, township, community
college district, or school district, before January 1, 1964, if
the assessment required to be made under this act would be less
than the assessment as state equalized prevailing on the property
at the time of the issuance of the bonds. This inapplicability
shall continue until levy of taxes to pay principal and interest on
the bonds is no longer required. The assessment of property
required by this act shall be applicable for all other purposes.
(6) As used in this act, "transfer of ownership" means the
conveyance of title to or a present interest in property, including
the beneficial use of the property, the value of which is
substantially equal to the value of the fee interest. Transfer of
ownership of property includes, but is not limited to, the
following:
(a) A conveyance by deed.
(b) A conveyance by land contract. The taxable value of
property conveyed by a land contract executed after December 31,
1994 shall be adjusted under subsection (3) for the calendar year
following the year in which the contract is entered into and shall
not be subsequently adjusted under subsection (3) when the deed
conveying title to the property is recorded in the office of the
register of deeds in the county in which the property is located.
(c) A conveyance to a trust after December 31, 1994, except if
the settlor or the settlor's spouse, or both, conveys the property
to the trust and the sole present beneficiary or beneficiaries are
the settlor or the settlor's spouse, or both.
(d) A conveyance by distribution from a trust, except if the
distributee is the sole present beneficiary or the spouse of the
sole present beneficiary, or both.
(e) A change in the sole present beneficiary or beneficiaries
of a trust, except a change that adds or substitutes the spouse of
the sole present beneficiary.
(f) A conveyance by distribution under a will or by intestate
succession, except if the distributee is the decedent's spouse.
(g) A conveyance by lease if the total duration of the lease,
including the initial term and all options for renewal, is more
than 35 years or the lease grants the lessee a bargain purchase
option. As used in this subdivision, "bargain purchase option"
means the right to purchase the property at the termination of the
lease for not more than 80% of the property's projected true cash
value at the termination of the lease. After December 31, 1994, the
taxable value of property conveyed by a lease with a total duration
of more than 35 years or with a bargain purchase option shall be
adjusted under subsection (3) for the calendar year following the
year in which the lease is entered into. This subdivision does not
apply to personal property except buildings described in section
14(6) and personal property described in section 8(h), (i), and
(j). This subdivision does not apply to that portion of the
property not subject to the leasehold interest conveyed.
(h) A conveyance of an ownership interest in a corporation,
partnership, sole proprietorship, limited liability company,
limited liability partnership, or other legal entity if the
ownership interest conveyed is more than 50% of the corporation,
partnership, sole proprietorship, limited liability company,
limited liability partnership, or other legal entity. Unless
notification is provided under subsection (10), the corporation,
partnership, sole proprietorship, limited liability company,
limited liability partnership, or other legal entity shall notify
the assessing officer on a form provided by the state tax
commission not more than 45 days after a conveyance of an ownership
interest that constitutes a transfer of ownership under this
subdivision.
(i) A transfer of property held as a tenancy in common, except
that portion of the property not subject to the ownership interest
conveyed.
(j) A conveyance of an ownership interest in a cooperative
housing corporation, except that portion of the property not
subject to the ownership interest conveyed.
(7) Transfer of ownership does not include the following:
(a) The transfer of property from 1 spouse to the other spouse
or from a decedent to a surviving spouse.
(b) A transfer from a husband, a wife, or a husband and wife
creating or disjoining a tenancy by the entireties in the grantors
or the grantor and his or her spouse.
(c) A transfer of that portion of property subject to a life
estate or life lease retained by the transferor, until expiration
or termination of the life estate or life lease. That portion of
property transferred that is not subject to a life lease shall be
adjusted under subsection (3).
(d) A transfer through foreclosure or forfeiture of a recorded
instrument under chapter 31, 32, or 57 of the revised judicature
act of 1961, 1961 PA 236, MCL 600.3101 to 600.3285 and MCL 600.5701
to 600.5759, or through deed or conveyance in lieu of a foreclosure
or forfeiture, until the mortgagee or land contract vendor
subsequently transfers the property. If a mortgagee does not
transfer the property within 1 year of the expiration of any
applicable redemption period, the property shall be adjusted under
subsection (3).
(e) A transfer by redemption by the person to whom taxes are
assessed of property previously sold for delinquent taxes.
(f) A conveyance to a trust if the settlor or the settlor's
spouse, or both, conveys the property to the trust and the sole
present beneficiary of the trust is the settlor or the settlor's
spouse, or both.
(g) A transfer pursuant to a judgment or order of a court of
record making or ordering a transfer, unless a specific monetary
consideration is specified or ordered by the court for the
transfer.
(h) A transfer creating or terminating a joint tenancy between
2 or more persons if at least 1 of the persons was an original
owner of the property before the joint tenancy was initially
created and, if the property is held as a joint tenancy at the time
of conveyance, at least 1 of the persons was a joint tenant when
the joint tenancy was initially created and that person has
remained a joint tenant since the joint tenancy was initially
created. A joint owner at the time of the last transfer of
ownership of the property is an original owner of the property. For
purposes of this subdivision, a person is an original owner of
property owned by that person's spouse.
(i) A transfer for security or an assignment or discharge of a
security interest.
(j) A transfer of real property or other ownership interests
among members of an affiliated group. As used in this subsection,
"affiliated group" means 1 or more corporations connected by stock
ownership to a common parent corporation. Upon request by the state
tax commission, a corporation shall furnish proof within 45 days
that a transfer meets the requirements of this subdivision. A
corporation that fails to comply with a request by the state tax
commission under this subdivision is subject to a fine of $200.00.
(k) Normal public trading of shares of stock or other
ownership interests that, over any period of time, cumulatively
represent more than 50% of the total ownership interest in a
corporation or other legal entity and are traded in multiple
transactions involving unrelated individuals, institutions, or
other legal entities.
(l) A transfer of real property or other ownership interests
among corporations, partnerships, limited liability companies,
limited liability partnerships, or other legal entities if the
entities involved are commonly controlled. Upon request by the
state tax commission, a corporation, partnership, limited liability
company, limited liability partnership, or other legal entity shall
furnish proof within 45 days that a transfer meets the requirements
of this subdivision. A corporation, partnership, limited liability
company, limited liability partnership, or other legal entity that
fails to comply with a request by the state tax commission under
this subdivision is subject to a fine of $200.00.
(m) A direct or indirect transfer of real property or other
ownership interests resulting from a transaction that qualifies as
a tax-free reorganization under section 368 of the internal revenue
code, 26 USC 368. Upon request by the state tax commission, a
property owner shall furnish proof within 45 days that a transfer
meets the requirements of this subdivision. A property owner who
fails to comply with a request by the state tax commission under
this subdivision is subject to a fine of $200.00.
(n) A transfer of qualified agricultural property, if the
person to whom the qualified agricultural property is transferred
files an affidavit with the assessor of the local tax collecting
unit in which the qualified agricultural property is located and
with the register of deeds for the county in which the qualified
agricultural property is located attesting that the qualified
agricultural property shall remain qualified agricultural property.
The affidavit under this subdivision shall be in a form prescribed
by the department of treasury. An owner of qualified agricultural
property shall inform a prospective buyer of that qualified
agricultural property that the qualified agricultural property is
subject to the recapture tax provided in the agricultural property
recapture act, 2000 PA 261, MCL 211.1001 to 211.1007, if the
qualified agricultural property is converted by a change in use. If
property ceases to be qualified agricultural property at any time
after being transferred, all of the following shall occur:
(i) The taxable value of that property shall be adjusted under
subsection (3) as of the December 31 in the year that the property
ceases to be qualified agricultural property.
(ii) The property is subject to the recapture tax provided for
under the agricultural property recapture act, 2000 PA 261, MCL
211.1001 to 211.1007.
(o) A transfer of qualified forest property, if the person to
whom the qualified forest property is transferred files an
affidavit with the assessor of the local tax collecting unit in
which the qualified forest property is located and with the
register of deeds for the county in which the qualified forest
property is located attesting that the qualified forest property
shall remain qualified forest property. The affidavit under this
subdivision shall be in a form prescribed by the department of
treasury. An owner of qualified forest property shall inform a
prospective buyer of that qualified forest property that the
qualified forest property is subject to the recapture tax provided
in the qualified forest property recapture tax act, 2006 PA 379,
MCL 211.1031 to 211.1036, if the qualified forest property is
converted by a change in use. If property ceases to be qualified
forest property at any time after being transferred, all of the
following shall occur:
(i) The taxable value of that property shall be adjusted under
subsection (3) as of the December 31 in the year that the property
ceases to be qualified forest property.
(ii) The property is subject to the recapture tax provided for
under the qualified forest property recapture tax act, 2006 PA 379,
MCL 211.1031 to 211.1036.
(p)
Beginning on the effective date of the amendatory act that
added
this subdivision December 8,
2006, a transfer of land, but
not buildings or structures located on the land, which meets 1 or
more of the following requirements:
(i) The land is subject to a conservation easement under
subpart 11 of part 21 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.2140 to 324.2144. As used in
this subparagraph, "conservation easement" means that term as
defined in section 2140 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.2140.
(ii) A transfer of ownership of the land or a transfer of an
interest in the land is eligible for a deduction as a qualified
conservation contribution under section 170(h) of the internal
revenue code, 26 USC 170.
(q) A transfer of real property or other ownership interests
resulting from a consolidation or merger of a domestic nonprofit
corporation that is a boy or girl scout or camp fire girls
organization, a 4-H club or foundation, a young men's Christian
association, or a young women's Christian association and at least
50% of the members of that organization or association are
residents of this state.
(r) Beginning December 31, 2011, a transfer of any real
property if the transferee is related to the transferor by blood or
affinity to the third degree and the use of the real property does
not change following the transfer. However, if the real property is
subsequently transferred to a person not related to the transferor
by blood or affinity to the third degree within 7 years, a transfer
of ownership of the real property shall be considered to have
occurred as of the date of the transfer and a corrected tax bill
shall be issued for each tax year being adjusted by the local tax
collecting unit if the local tax collecting unit has possession of
the tax roll or by the county treasurer if the county has
possession of the tax roll. If the owner of the real property pays
the corrected tax bill issued under this subsection within 30 days
after the corrected tax bill is issued, that owner is not liable
for any penalty or interest on the additional tax. An owner who
pays a corrected tax bill issued under this subsection more than 30
days after the corrected tax bill is issued is liable for the
penalties and interest that would have accrued from the date the
taxes were originally levied.
(8) If all of the following conditions are satisfied, the
local tax collecting unit shall revise the taxable value of
qualified agricultural property taxable on the tax roll in the
possession of that local tax collecting unit to the taxable value
that qualified agricultural property would have had if there had
been no transfer of ownership of that qualified agricultural
property since December 31, 1999 and there had been no adjustment
of that qualified agricultural property's taxable value under
subsection (3) since December 31, 1999:
(a) The qualified agricultural property was qualified
agricultural property for taxes levied in 1999 and each year after
1999.
(b) The owner of the qualified agricultural property files an
affidavit with the assessor of the local tax collecting unit under
subsection (7)(n).
(9) If the taxable value of qualified agricultural property is
adjusted under subsection (8), the owner of that qualified
agricultural property shall not be entitled to a refund for any
property taxes collected under this act on that qualified
agricultural property before the adjustment under subsection (8).
(10) The register of deeds of the county where deeds or other
title documents are recorded shall notify the assessing officer of
the appropriate local taxing unit not less than once each month of
any recorded transaction involving the ownership of property and
shall make any recorded deeds or other title documents available to
that county's tax or equalization department. Unless notification
is provided under subsection (6), the buyer, grantee, or other
transferee of the property shall notify the appropriate assessing
office in the local unit of government in which the property is
located of the transfer of ownership of the property within 45 days
of the transfer of ownership, on a form prescribed by the state tax
commission that states the parties to the transfer, the date of the
transfer, the actual consideration for the transfer, and the
property's parcel identification number or legal description. Forms
filed in the assessing office of a local unit of government under
this subsection shall be made available to the county tax or
equalization department for the county in which that local unit of
government is located. This subsection does not apply to personal
property except buildings described in section 14(6) and personal
property described in section 8(h), (i), and (j).
(11) As used in this section:
(a) "Additions" means that term as defined in section 34d.
(b) "Beneficial use" means the right to possession, use, and
enjoyment of property, limited only by encumbrances, easements, and
restrictions of record.
(c) "Converted by a change in use" means that term as defined
in the agricultural property recapture act, 2000 PA 261, MCL
211.1001 to 211.1007.
(d) "Inflation rate" means that term as defined in section
34d.
(e) "Losses" means that term as defined in section 34d.
(f) "Qualified agricultural property" means that term as
defined in section 7dd.
(g) "Qualified forest property" means that term as defined in
section 7jj[1].
