Calculating business property taxes can be a tedious, irritating part of accounting for your company. You have better, more important tasks, so you may be tempted to try to get it out of your hair as quickly as possible. Business owners and managers, as well as most accounting firms, often focus on federal and state income tax but spend very little time on property taxes. If you, or your CPA’s, are not paying close attention to your business property taxes, you could be paying entirely too much.
In this article, we want to help business owners and managers understand what you need to know about property taxes and how to avoid paying more than your fair share.
REAL ESTATE PROPERTY TAXES
Generally, business property tax is subdivided into two categories: Real Estate and Personal Property. Real Estate taxes typically refer to the land and buildings your company owns. There are, however, some instances where items other than land and structures will be taxed as real estate.
Personal Property taxes include those things that are not real estate such as equipment, furniture, machinery, etc. We will discuss this further in a future article.
It can be difficult to determine the category under which certain items fall. Depending on state and local stipulations, real estate and personal property are taxed uniquely; therefore, it is vital to accurately make the distinction. item cannot be removed without damaging a building, it will typically be taxed as real estate property; however, it may not be that simple. For business owners in any industry, managers of manufacturing companies, accounts, and county officials, it is easy to misidentify an item and pay taxes twice. It is vital for business owners, managers, and accountants to consult real estate property tax, experts.
MASS APPRAISAL TECHNIQUES
Your company’s tax rate is a percentage of the county’s valuation of your real estate property. That rate is set by a board of commissioners and rarely changes. The valuation of your property does change periodically, however, even if you do not make any capital improvements to your property.
County property is appraised every 4 to 8 years, with county officials utilizing mass appraisal techniques to determine changes to what land and buildings are worth in your area. Walk-throughs are rare and generally used only when large new buildings are constructed. That means that some buildings, especially those of unique size or shape may be appraised unusually. Business owners and managers may find they do not agree with the valuation of that property. In that case, it is important to appeal the appraisal.
APPEALING REAL ESTATE PROPERTY APPRAISALS
It is possible the county will appraise your property in a manner you deem unfair or incorrect. You can go through the process for appeal and may indeed find you are correct about the value of your property. If successful, the appeals process could result in substantial savings for your company.
- First 30 Days: Property owners are notified of the change in the value of their property. Within 30 days of this notice in most counties, though it is only fifteen days in some counties, you can appeal an appraisal.
- January: Businesses can appeal their property valuation for thirty days every January. If you find long lines and log jams immediately following an appraisal, you may find this time slot more efficient.
- Letter to the County: Whether you are appealing following the appraisal or during the January window, the process begins with a letter in your county.
- Informal Appeal Process: At this point, you will speak to the appraiser, which may be a third party, and attempt to come to a conclusion with which all parties are comfortable. If you are successful here, your property will be appraised accordingly.
- Letter to the Board of Equalization: The Board of Equalization (BOE) is a group of community business leaders appointed by county commissioners to ensure the property is valued equally.
- Judicial: If you have exhausted other measures, you can take your concerns to the court system.
Sharon H. Lyall C.P.A. is here to help business owners, managers, and accountants navigate real estate property taxes. For existing clients, we will review property valuations to help determine whether appeals should be made. If you are working through a new property valuation or you know you need help with aspects of your business property taxes, contact Sharon H. Lyall C.P.A. today.