How Nursing Homes Can Save on Property Taxes

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Nursing home operators often find deciphering business property taxes difficult. From the building and land to vast quantities of equipment, nursing home owners face significant tax bills. In this post on how nursing homes can save money on property taxes, we’ll review the steps officials can take to ensure they’re not paying too much in business property taxes.

REAL ESTATE TAXES FOR NURSING HOMES

Real estate taxes cover the land and buildings the nursing home owns. Real estate taxes for businesses work the same as the property taxes you pay on your home. The local authority responsible for calculating and collecting property taxes, typically a county assessor, appraises what they think the property is worth. Officials multiply their estimated value by the tax rate to determine the final bill. In most cases, the county collects taxes for several jurisdictions. A nursing home’s property tax bill could include city, county, school district, hospital district, and other assessments.

HOW NURSING HOMES CAN SAVE MONEY ON REAL ESTATE TAXES

When a nursing home receives property valuation notices, officials should review them for accuracy. Appraisals should be in line with the market trends in your area. Many business owners neglect to file an appeal. As a taxpayer, you don’t have to accept the county’s valuation. You can appeal to lower your tax bill.

BUSINESS PERSONAL PROPERTY FOR NURSING HOMES

If your nursing home operates in a state that collects personal property tax, you’ll also pay taxes on the non-real estate assets used to run your business.

EXAMPLES OF BUSINESS PERSONAL PROPERTY INCLUDE:

Furniture
Equipment
Supplies
Computers

Assessors calculate personal property taxes differently than real estate taxes. Business owners must submit a complete inventory of assets, including their purchase date and price. Each asset also requires a category. Each county will determine the categories and the corresponding depreciation schedules. The depreciated value of the asset determines how much you pay in taxes. For example, a $50,000 piece of equipment depreciated to 50% in its fifth year of service would have a taxable value of $25,000 for that year. So if your personal property tax rate is 1%, you owe $250 in taxes.

HOW NURSING HOMES CAN SAVE MONEY ON BUSINESS PERSONAL PROPERTY TAXES

There are a lot of ways that a nursing home can save money on taxes. Some of them are dependent on your specific business. It’s best to work with a CPA to determine all the ways your business can save. In the meantime, here are a few general ways.

DON’T PAY TWICE FOR THE SAME EQUIPMENT

Nursing homes are susceptible to overpaying taxes by repeatedly paying for the same piece of property. How can that happen?

The first way nursing homes overpay on taxes is when an asset is on their personal property listing and considered part of the value of the building. Regulations vary from one jurisdiction to another. Know the rules for each location and ensure you’re not paying personal property tax on items included in your real estate taxes.

The second way nursing homes overpay on taxes happens when a company operates in several locations. The same piece of equipment could be on three different location’s asset listings. This situation frequently occurs after a merger or acquisition. If you have multiple locations, review asset listings to ensure you’re not paying taxes on the same property in various counties.

CLEAN UP YOUR ASSET LISTINGS

In addition, review the listings for ghost assets and idle equipment. Ghost assets haunt your tax bill by remaining on your asset list long after selling or disposing of the equipment. You shouldn’t pay taxes on something you no longer own. Idle equipment can also cause companies to overpay their business personal property tax. Suppose you’re not using an asset and have no immediate plans to return the item to service. In that case, you could qualify for an accelerated depreciation schedule, so you pay less tax on that item.

CHECK YOUR ASSET CATEGORIZATION

Depreciation schedules significantly impact the amount you pay on an item and for how long. Asset categories vary in practical life, meaning some items depreciate over 10 years and others over five. Nursing homes have various types of equipment, especially medical equipment, which could qualify for different categories. Asset categorization also varies by county. A tax professional can help you determine the proper categorization for each asset and location.

HOW SHARON H. LYALL, CPA, HELPS NURSING HOMES SAVE MONEY ON PROPERTY TAXES

Sharon H. Lyall, CPA, and staff offer nursing home owners unparalleled expertise and experience in business property taxes. Our dedicated team of experts has helped nursing homes, doctors, hotel owners, and other business owners optimize their property tax strategy for more than 20 years. From reviewing tax assessments to a thorough free asset review, we offer various services to help businesses with business property taxes.