Are you being double assessed? The topic of real property versus personal property has been an on-going debate in various jurisdictions throughout the United States. Having your assessments reviewed should always include real property and personal property assessments together.

The installation and use of assets in the manufacturing, warehouse/distribution, refrigeration industries should always call into question how the property is classified and valued for assessment purposes. For the vast majority of these type properties, the assets included in the sale of the property needs to be examined. For example, if a manufacturing facility replaces and classifies as personal property an overhead crane that has been historically affixed to the building and the assessments have been based on the sales comparables of like properties, is the crane being double assessed as it will most likely be reported as additions to personal property.

Most courts have always relied on a 3-prong test of adaptation, annexation and intent of the parties. Intent of the parties is generally given the most weight in court decision’s that have been rendered. Most recently a case involving refrigeration equipment was heard by the Virginia Supreme Court.

Other trends and areas of misclassified tangible personal property are:

  • machinery and equipment that has been cannibalized to be used as spare parts for operating machinery and equipment;
  • assets that no longer exist due to either theft, abandonment, or having been discarded;
  • assets that were previously added to tangible personal property reports lists in lump sum amounts leaving no clue as to the description of the original asset or whether it currently exists (this scenario is common where a lump sum transfer of a business has occurred);
  • assets that are now being used for a function other than their original purpose, e.g., an inoperable freezer being used to shelve bread;
  • assets that have been properly recorded as being deleted from the business’ tax returns but not from the taxing authority’s records; and
  • used assets listed as new with remaining useful lives listed improperly. Contact us for a no-cost/no-obligation
    review of your real and personal property assessments. Silver Oak Advisors does not utilize staff in these areas.

These no-cost/no-obligation reviews are handled by our Directors. We believe you deserve 40 years of Big 4 and industry experience in Complex and Industrial properties and a history of results.

Advertisements