Types of Business Property Taxes for Breweries
Breweries pay two types of property taxes: real estate and personal property. Unlike income taxes, which officials determine you pay at the federal and state level, local taxing jurisdictions levy and collect property taxes. Typically, a county government office collects the taxes for the county government and other smaller jurisdictions in the county, such as cities and school districts, but this is of course not always the case. Some cities handle the collection of their portion of the tax separate from the county.
Real Estate Taxes
Real estate or real property taxes cover the land and buildings your business owns. Taxing jurisdictions determine your real property tax bill by charging a percentage of the property’s appraised value. Assessors estimate the market value of the land and buildings to determine the property's appraised value.
Business Personal Property
Personal property covers the assets, besides the land and building needed to run your business. As a general rule, if you would move it if you changed locations, then the asset is personal, not real property.
Examples of business personal property include:
Local taxing authorities calculate personal property taxes based on depreciation schedules.
Most counties follow a process like this for business personal property taxes:
- Business owners submit a list of assets, including their purchase date, cost, and category. But each taxing jurisdiction determines the categories and the depreciation schedule for each category.
- Counties apply the depreciation schedule and the current year’s tax rate to determine how much a business owes. For example, a $100,000 piece of equipment, depreciated to 50% in its fourth year of service, would have a taxable value of $50,000 for that year. So if your personal property tax rate is 1%, a business would owe $500 in taxes.
- Businesses either pay the bill or appeal.
How to Find Brewery Property Tax Savings
Now that we’ve covered the types of business property tax brewery owners pay, let’s review how breweries can pay less.
Step 1: Clean Up Your Asset Listings
An inaccurate asset listing leads to breweries overpaying their business personal property taxes. If you no longer own or use equipment, update the asset listing you provide to the county assessor. You shouldn’t pay taxes on a ghost asset you no longer own. Unused or idle equipment sometimes qualifies for accelerated depreciation, reducing your tax bill.
Step 2: Check For Optimal Asset Categorization
Miscategorization of assets also can inflate your tax bill. Asset categories and depreciation schedules vary from county to county. Specialized businesses, like breweries, can benefit from ensuring their property taxes use the most beneficial and accurate depreciation schedule. The useful life and depreciation percentages differ for more specialized categories than more generic equipment categories.
Step 3: Know and Apply the Latest Regulations
Taxing rules vary significantly from one jurisdiction to another. Understanding the regulations for each of your business locations can help you find additional tax savings. Brewery owners should pay special attention to how authorities determine what qualifies as real or personal property.
Breweries make complex and expensive upgrades to a building. If some equipment or modifications count in the building valuation, they could tax you twice for them. This over-taxing happens if the item is still on your personal property asset listing.
Step 4: Review Appraisals and Bills Carefully
You need to review it for accuracy as soon as you get a tax bill or property valuation notice. Does your personal property tax bill match the asset listing you submitted? Does your real estate property appraisal seem correct?
Step 5: Appeal When Warranted
If you don’t agree with the appraisal value of your property or something about your personal property tax bill, you should consider filing an appeal. Successful appeals can lower your tax bill. Be sure you note the deadline to file your appeal so you don’t miss the opportunity.
Step 6: Take Advantage of Payment Discounts
Finally, brewery owners trying to find property tax savings should investigate the payment options for their taxes. Some taxing authorities offer discounts for early full payments. Others might not offer a discount but will charge more if you elect to pay in installments. Scrutinize your bill and payment options to pick one with the most savings potential
Let a Trusted Tax Accountant Help Your Brewery Find Tax Savings
Business property taxes require experience and expertise. Choosing the right accountant can make a huge difference in how easy it is to file taxes and how much you pay. An accountant can ensure you have everything prepared for filing and review your bills to identify potential tax savings.
Sharon H. Lyall, CPA, and staff specialize in the complex area of business property taxes. Their experts have helped breweries, fast food restaurants, banks, and other business owners optimize their property tax strategy for more than 20 years. Schedule an introductory meeting to learn more about how Sharon H. Lyall, CPA, can help your business find property tax savings.