"Business Fixture" Ruling Could Mean Changes in Your Property Taxes
An Ohio Supreme Court decision this week may impact the amount your business pays in real estate taxes. On July 15, 2015, the Ohio Supreme Court ruled that grain storage bins constitute personal property under state law and are therefore not subject to real property taxes. Metamora Elevator Co. v. Fulton Cty. Bd. Of Revision, No. 2015-Ohio-2807 (July 15, 2015). However, this decision is not limited to only grain storage bins. Certain business-owned property that was previously thought of as “real property” might now be re-classified as “personal property,” which is not subject to real property taxes. The statute defining personal property, R.C. 5701.03 lists as a subset of personal property, “business fixtures.” A “business fixture” is an item of tangible personal property that is permanently attached or affixed to the land or to a building, structure, or improvement and that primarily benefits the business conducted on the property. “Business fixture” includes, but is not limited to, machinery equipment, signs, storage bins and tanks, whether above or below ground, and broadcasting, transportation, transmission, and distribution systems, whether above or below ground. Funtime, Inc. v. Wilkins, 105 Ohio St.3d 74, 2004-Ohio-6890, 822 N.E.2d 781. “Business fixture also means those portions of buildings, structures, and improvements that are specially designed, constructed, and used for the business conducted in the building, structure, or improvement, including but not limited to, foundations and supports for machinery and equipment.”
In determining whether something is a “business fixture,” the court looks at whether the item is specially adapted to the business being served and whether it could be removed and taken to other locations. As a result of this recent ruling, a business may want to re-assess its business-associated property items to determine whether they can be categorized as “business fixtures,” and thus treated as personal property for property tax purposes in Ohio.