Business Personal Property Tax
Business personal property tax assessments typically exceed market value by 50 to 100%. This is because assessors use straight-line depreciation to value business personal property.
Example of Straight-Line Depreciation
Do you believe a 1-year-old conference table that cost $1,000 is worth $900? Could you sell it for $900? If you render, assessors are valuing office furniture based on a 7 or 10-year straight line depreciation schedule. The assessor will routinely value a 1-year-old table for 90% of its cost; this is clearly unreasonable.
What is a Business Personal Property Tax?
Business personal property taxes are based on the value of tangible personal property used in a business. Tangible personal property can be touched or felt. Office furniture, computers, heavy equipment, vehicles and inventory are tangible personal property. Business enterprise value, bonds, accounts receivable and contracts (leases) are intangible personal property. Only tangible personal property is subject to property taxes. Intangible personal property is exempt in all 50 states.
Business personal property taxes are an ad valorem tax; they are based on the market value of the property. However, the straight-line depreciation used by assessors grossly overstates value with the exception of inventory.
Business Personal Property Tax Rendition
Business personal property is taxable in most states. Assessors request that businesses provide a list of its business personal property. The form used by assessors request a summary based on category of property and the amount for each category purchased annually for the last 15 to 20 years. Assessors have forms that look official and necessary. However, most states simply require a property owner to render information regarding their business personal property. In most cases, it is possible to provide an estimate of the value of business personal property instead of providing the detailed fixed asset listing This approach saves time and reduces business personal property taxes.
How to File a Business Personal Property Rendition
Assessors will generally accept an estimate of value for smaller business personal roperty accounts. However, for larger accounts, assessors will attempt to force the owner to produce a detailed summary of personal property purchases by year. In addition to being tedious and time consuming to prepare, the form requested by assessors leads to an assessed value well in excess of market value. For smaller accounts (say under $100,000 in market value), most owners will benefit by providing only an estimate of the fair market value of business personal property.
Business Personal Property Services Available
O’Connor will file renditions for you.
File appeals and attend BPP protest hearings.
Coordination of Judicial Appeals on a Contingency Fee Basis
Coordinate judicial appeals (i.e. district court suits) at our expense. O’Connor pays court filing fees, legal fees, and for the expert witness report and expert witness testimony. There is no fee unless we reduce your property taxes, and then the fee is only a portion of your business personal property tax savings.
Expert Appraisal by Appraisal Institute Designated Appraisers Mike Miller, MAI and Ryan Link, MAI
If you prefer to handle your own appeals, we can provide BPP appraisal reports by experts Mike Miller, MAI and Ryan Lin, MAI.
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