Advocating for the commercial REALTOR®
MiCAR’s public policy sub-committee and public policy staff are committed to serving the interests and needs of commercial REALTORS® in the state legislative arena. On a range of issues, from commercial vacancy obsolescence to small business tax reform to sales of business opportunities and eminent domain, MiCAR’s strong policy presence makes a difference. With the strength of 1,300 commercial practitioners and nearly 26,000 appraisers and residential REALTORS® behind it, the MAR public policy team is able to prevent legislative moves that harm the industry and advance those that help it.
Current issues:
Current news:
Michigan Business Tax Estimator
The Michigan Department of Treasury has announced an updated Web site dedicated to the new Michigan Business Tax (MBT). A new version of the Michigan Business Tax (MBT) Estimator is now available that takes into account the new surcharge that was signed into law in exchange for the elimination of the service tax. This program allows you to estimate your tax liability under the new MBT, which replaced the previous tax plan, the Single Business Tax (SBT). The Estimator is intended to give an approximation and comparison of your tax liability. The new Web site also contains an overview of the new MBT, along with details on various elements such as Nexus, Unitary Filing, and Apportionment. Recent MBT presentations, including two Webinars, can be downloaded from the site as well.
The link to the Web site is below:
www.michigan.gov/mbt
To access the MBT Estimator, please click below:
https://treas-secure.state.mi.us/MBTEstimator/MBTEstimator-start.asp
Please keep us informed on any unforeseen consequences that the new MBT may impose on your business by utilizing the estimator. If you have any questions, comments or concerns, please contact us at 800.454.7842 or mar@mirealtors.com.
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Commercial Broker Lien Bill – SB 1099
The MAR worked closely with Sen. Mike Bishop in modeling this legislation after the Construction Lien Act to protect rightfully earned commissions of our commercial members. The introduction of the legislation raised some concern among other interest groups such as the Michigan Bar Association, Michigan Land Title Association, and BOMA. A majority of the concerns stem from the recording gap that is present in many county registers of deeds, most prominently, Wayne County.
The bills were effectively held from committee by the majority policy staff until all sides could air their concerns. In the spirit of cooperation MAR continued to explore a “Florida-type” compromise which places the lien on the proceeds from the sale rather than the real property itself. Members of MiCAR were less than enamored with the approach given that it requires the broker to have knowledge of when and where the closing will take place.
Though the 2005-2006 legislative session has come to a close look for the reintroduction of this legislation as it was introduced last year.
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Real Estate Enforcement Fund Expansion – HB 6267
This bill expands the authority of the Attorney General and the Department of labor and Economic Growth to utilize the existing Real Estate Enforcement Fund to investigate and prosecute unlicensed activity and real estate fraud. The FBI recently ranked Michigan among the top five states in the country in incidents of fraud and this legislation became important to address the growing problem and the changing face of fraudulent activity in Michigan.
The legislature passed HB 6267 before session ended and it is now awaiting the Governor’s signature. Appropriations were made in this year’s AG budget to make sure this money is going to the purpose for which it was intended.
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Michigan Business Tax Devalues Commercial Real Estate
3.25.08
Michigan’s commercial real estate community has been unfairly burdened under the new Michigan Business Tax (MBT) structure. In current form, the MBT devalues existing assets, punishes long-time investors and discourages new investment in commercial real estate. While Michigan attempts to recruit new business ventures, the treatment of commercial real estate under the MBT poses a significant disincentive to invest in our state. The negative effects of this tax on Michigan property will ultimately lead to declining economic growth and less tax revenue.
The Michigan Association of REALTORS®, consisting of leading practitioners from across the state, is providing a framework for modifications of the new MBT that would prove to be better tax policy for all Michigan businesses and citizens. These proposals include:
- Eliminating the 22% MBT Surcharge
As it stands, the MBT surcharge combined with all other inequalities in the tax devastates the commercial industry in this state. The surcharge imposes a significant disadvantage in attracting new businesses and jobs to Michigan and in retaining those we have. Its effects are felt not only by the commercial industry, but by the business community as a whole.
- Reinstating the 10-year Investment Tax Credit carryforward
Eliminate the MBT requirement that any Investment Tax Credit (ITC) granted under the Single Business Tax (SBT) be used in 2008 and 2009, and reinstate the 10-year carry forward for all ITC. Under the MBT, ITC not fully utilized in the year of acquisition is lost, yet businesses must pay back ITC in the year of sale whether utilized or not. A ten-year carryforward would allow most businesses to reap the intended benefit of the credit.
- Including real estate in the definition of inventory for the purposes of “purchases from other firms”
Real estate held for development purposes and available for sale should be treated as inventory and counted against a property owner’s gross receipts, just as a manufacturer can reduce their liability through their inventory of parts and product.
- Allowing Common Area Maintenance (CAM) to be deducted from gross receipts in calculating the new tax
Taxation of the CAM as part of gross receipts has a direct negative effect on net operating income (NOI) and, therefore, on the valuation of real estate. Property owners should not be taxed on receipts that represent cost reimbursements rather than rental or fee income.
- Offering a “fresh start” for allowed depreciation on all commercial real estate beginning January 1, 2008
Under the SBT, commercial property did not receive the benefit of depreciation. When sold under the MBT, the same property will be taxed on the difference between their federal adjusted basis and the sales price; taxed on a deduction that was never received. The basis of each property should be given a “fresh start” to allow the property’s MBT gain to be calculated based on depreciation deductions actually received for state tax purposes.
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MAR Public Policy Staff
Supporting MiCAR is part of every MAR staff member's job. No other organization could support the range of services provided by MAR given our expansive staff of real estate professionals.
View the entire directory of MAR Staff
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While
MiCAR does its part for commercial REALTORS® on
the state level, the National Association of REALTORS® advocates
for commercial REALTORS® at
the federal level. 
