Applying the New Personal Property Tax Exemption

February 4, 2015

The new exemption is complicated and even counterintuitive.

First, the exemption applies only if more than 50% of the personal property (measured by cost) at your location is used either for industrial processing or in direct integrated support of that processing.

Second, even if you pass that 50% hurdle, only new property (in service in 2013 or later) and old property (in service at least 10 years old as of 2016) will be exempt. Anything in the middle will be taxed.

In the coming months, do a dry run to see if each of your locations will pass the 50% test.  Then determine how much, if any, of the property at that location may be exempt in 2016.  If you are barely over or under the 50% test, you’ll want to consider some strategies to make sure you meet that test as of December 31, 2015.

Contributed by Jeffrey S. Ammon, attorney with Miller Johnson.

View the on-demand webinar “Personal Property Tax: PPT Tax-Saving Strategies” with Jeffery Ammon.