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Friday, 26 February 2016 12:59

Did You Know? Taxation of Solar PV Systems in MIchigan

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Taxation of Solar Systems

James J. Carter, February 25, 2016

tax assessment

The Michigan Tax Tribunal has held that a solar system is personal property, not real property, and therefore should be taxed as personal property. Schmitt v. Charleston Township, decided December 21, 2012. This case was not appealed to the Michigan Court of Appeals, and therefore is the current law for Michigan.

Since homeowners are not taxed on their personal property, no homeowner's tax assessment should increase as a result of installing a solar system. Commercial and industrial taxpayers will be taxed in the same manner they are taxed on other business personal property. There are many exceptions for business personal property.

Local tax assessors generally do not have a legal background. They rely on their understanding of what is real property, and for years they have applied the common law doctrine that tangible movable property which becomes attached to the real estate, with the intention that it stay attached, is considered a fixture and is therefore real estate and assessable (for example, a deck). The Tax Tribunal rejected the argument that the common law (law from judicial decisions) applied and based their decision on a Michigan statute that defined a solar photovoltaic system as personal property. The common law has been changed many times by statute, and that happened in this case.

A real property owner, either residential, commercial or industrial, should appeal any increase in assessment that is based on a solar installation.


Read 1684 times Last modified on Thursday, 24 March 2016 12:13