Cars and automobiles have a special place in the life and economy of our nation. As children, we look forward to the day when we can finally experience the independence afforded by a personal automobile. For adults, vehicles represent our ability to drive to the places we work and live. Historically, the advancement of our nation’s economy in the Twentieth Century was intrinsically tied to the success of the inventors, innovators, and manufacturers of the automobile.
Even today, the more our economy is driven by online and automated shopping, the more we need vehicles driving our goods to us. Car stores are more important than ever. When tax season rolls into a car store, owners, accountants, and CPAs tend to focus most of their energy on income tax and the IRS. However, dealerships often overpay for their business property taxes.
During these difficult times, people are tightening their budgets and stretching the mileage on their old automobiles. Dealerships are searching for creative ways to reduce overhead, encourage buying, and keep their people on board despite financial challenges. Lyall CPA wants to make sure your car store is taking every opportunity available to avoid paying more in property taxes than you owe. In this challenging season, here are some ways you can reduce your overhead even across multiple properties.
AVOID PAYING TOO MUCH IN REAL ESTATE PROPERTY TAX
Car stores pay property taxes on personal and real estate property. If it cannot be sold or removed without changing the building’s permanent structure, it is typically considered real estate when it comes time to pay property taxes. Dealerships and car stores have unique building designs that present challenges for deciphering how much they should be paying for real estate property taxes.
Car stores often have large showrooms, unique display centers, and garages with big doors and service bays. These structures present challenges for properly determining your car store’s real estate property value. Furthermore, when counties perform property valuations (typically every 4-8 years), they utilize mass appraisal software and techniques. Without stepping foot on your property, value is assigned and your property tax bill increases. You might end up paying too much in real estate property taxes due to ab incorrect appraisal of your property value and improper categorization of structures and equipment.
If you think that your property has been appraised unfairly, car store owners and managers can appeal. We have helped dealerships ensure their property is properly categorized and determine whether it makes sense to engage in the appeals process. If you need help determining whether you should initiate a revaluation of your property, contact Lyall CPA.
AVOID PAYING TOO MUCH FOR BUSINESS PERSONAL PROPERTY TAX
Personal property taxes are applied to assets that are not considered real estate. In an effort to make sure companies pay all that they owe and avoid being audited, car stores are especially susceptible to paying too much for their personal property taxes. Common pitfalls include:
- Improperly Depreciated Assets: Accountants and CPAs may not know how to effectively calculate depreciation for some items, or mistakenly apply a standard deprecation to all assets. Some assets depreciate more quickly according to state and municipal laws and codes. Car stores could be paying thousands more by not properly depreciating assets.
- Asset Tagging and Ghost Assets: Car stores are often paying property taxes for assets that are no longer in use or even on the premises. Proper asset tagging can cost car stores significantly come tax season. Common ghost assets for car stores include:
- Office equipment
- Vehicle trailers
- Computers and printers
- Telephones and fax machines
- Exemptions: Car stores may be failing to take advantage of their tax exemptions. Often CPAs are not aware of property tax exemptions for dealerships.
These issues are compounded across multiple locations. Few CPAs have expertise in this area, resulting in car stores often overpaying substantially. We are here to help you take measures to make sure you are not impacting your bottom line by paying more in property taxes than you actually owe. Lyall CPA is here to help make sure car stores are effectively calculating their taxes. We offer a free property tax review where we will help you identify potential pitfalls and potentially save your dealership money. If you are ready to make sure you are paying your fair share and no more, it is time to get in touch with Sharon Lyall CPA.