January 22, 2016
ALERT: Important Personal Property Assessment Ruling
Many Connecticut clients of the Pullman & Comley Property Tax Valuation Department own significant amounts of taxable personal property such as fixtures and furnishings, warehouse equipment and computer systems in addition to commercial real estate.
Each year, owners of non-exempt personal property are required to submit a declaration on a form furnished to them by the municipal assessor. The form requires owners to declare all assessable personal property and to apply the depreciation schedules on the form. Among other concerns, the assessors’ form stops depreciation at 30% of original cost for certain assets thereby artificially inflating their “value”. Many owners believe that the depreciated “values” generated by completing this form constitute nonappealable assessments under Connecticut law. This is not correct.
The applicable statute permits the assessor to rely on the declaration as a form of mass appraisal. However, the statute is permissive – not mandatory. This means that a taxpayer may appeal a personal property assessment provided it submits, along with the declaration, adequate information to the assessor explaining how it arrived at its alternative value so that the assessor may understand why the formulaic results of the mass appraisal declaration should not be applied.
In a decision released on October 7, 2015, the New Britain Tax Court ruled that the alternative statement of value and supporting information furnished by the owner of a Hartford hotel were sufficient to put the assessor on notice and entitled the owner to appeal the assessor’s valuation.
After trial, the Court ruled that the expert appraisal testimony furnished by the hotel owner accurately captured the market value of its non-real estate assets resulting in a substantial assessment reduction and a tax savings of approximately $50,000 annually.
Pullman & Comley represented the taxpayer in this case. The attorneys of Pullman & Comley’s Property Tax and Valuation Department will be pleased to discuss the implications of this important decision with you.
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