God help you if you live in Michigan.
When unemployment became onerous and the government was hit with declining tax revenues they decided to try to bolster the manufacturing sector. The passed a new tax law that gave special benefits to those creating new jobs.
As is typical with all governments, instead of lowering spending while the incentives took hold, they moved the burden to a new target. And that target was commercial real estate in the form of a tax hike that is 4 times what they are paying right now.
So instead of having a reliable income from commercial real estate, they have made the market insolvent as there is no economic incentive for buyers to come into the state and the market is in such flux that loans are not being written.
To make matters worse, lending standards are already tight and many commercial loans on properties are unable to be written for those refinancing (many commercial loans are of a 5 year term) so foreclosures are expected to SOAR in the state.
So the powers to be in Michigan are essentially facing a tax roll that is declining as manufacturing is dropping in the state, home prices are falling reducing taxes even further, and now have burdened the commercial real estate market to such a degree that it will soon be in free fall.
Last one out, turn out the lights?
The owners of Michigan’s malls, office buildings and warehouses are getting a huge shock this month as they begin to figure out their tax bills under the state’s new business tax. Some commercial-real-estate developers are seeing 200 to 400 percent increases as the result of the switch to the Michigan Business Tax from the Single Business Tax, which was eliminated last year.
The developers say the extra burden couldn’t come at a worse time.
“The real-estate industry — particularly the income-producing real-estate industry — is facing difficult times without the tax situation,” said Joshua T. Weiner, chief executive officer of Portage-based development firm Meyer C. Weiner Co. via MLive.com
Wow, that totally sucks. What more can I even say?
[...] (Spotted at The Real Estate Bloggers) [...]
Commercial property is always a soft target for small minded and short sighted revenue raisers.
[...] you may want to subscribe to my RSS feed. Thanks for visiting!Back in March I talked about how the Michigan legislature was trying to destroy real estate values in the state with a new tax system. Well, they passed the tax and now it is in [...]