Guide to Reducing Your Business Property Taxes
Strategies to help you stop overpaying and start saving
Many complex issues can affect your business property taxes. If you're like most small business owners, you probably don't have the manpower or the expertise to keep track of all those issues. As a result, you could be overpaying on your business property taxes — to the tune of thousands of dollars per year. However, there are several simple steps you can take to reduce your property tax payments. One of the first steps in minimizing your tax obligation is scheduling an assessment of your property. When you do, keep the following in mind:
- Even if commercial property values in the local market are rising, taxes at every business property are based on an individual assessment and history and may not increase as much as other adjacent businesses.
- After you receive the new property assessment, check with an assessor to determine if the market value compares accurately with the assessment.
- Another option is to ask your personal banker to see if he or she can appraise your property and compare that to the local tax collector's assessment.
- Local tax collectors have been known to hike commercial property taxes beyond what the market dictates, so there is precedent for challenging assessments.
The best contacts and resources to help you get it done
Assess your assessment
Determine whether the assessed value of your business property fits the current market conditions.
I recommend: AVTI, a nationwide property tax consulting firm, offers valuation analysis and assessment tracking among its many services. The American Society ofAppraisers has a searchable database that will allow you to locate an appraiser in your area.
Compare your assessment to neighbors
Find out what other businesses in your area are paying to see if your taxes are in line with theirs. You may have grounds for an appeal if you're paying more than your business neighbors.
I recommend: For a small fee, Intelius gives you the ability to look up the property tax information for any address in the U.S.
Call your local tax office to ascertain exactly how to file an appeal. Some cities have 311 numbers that can direct you to the right office.
I recommend: The National Tax Resource Group offers professional appeal services for all types of commercial real estate nationwide. These services are handled through qualified consultants in your local area.
File appeals for business personal property
Sometimes, you can reduce business property taxes through a business personal property tax appeal. This involves the valuation of equipment, furniture, computers and inventory.
I recommend: BurrWolf.com offers a number of property tax reduction services, including business personal property appeals.
Analyze additional factors
Several things can affect your property taxes, such as income and expense statements, market capitalization rates, replacement costs, costs of environmental cleanup and more.
I recommend: CBiz.com, a national property tax solutions firm, analyzes a wide variety of elements that may result in a reduction in taxes.
Consider a cost-segregation analysis
Cost segregation studies identify various components of your building that may be eligible for accelerated tax depreciation. By reclassifying certain assets in this way, you may see significant savings in your property tax obligations.
I recommend: The Griffin Valuation Group are experts in cost-segregation analysis and property tax consulting and aim to lower business property tax burdens.
Using a property tax software program can help you root out possible reductions and facilitate the appeal process.
I recommend: With ePropertyTax Office, you can track appeals, process assessments and analyze valuations.
Ensure proper zoning
Tax rates are linked to the various zoning classifications so it's a good idea to contact your local state tax office to ascertain if your zoning classification is accurate.
I recommend: Click on your state at TaxSites.com to make sure your business is classified correctly.
Tips & Tactics
Helpful advice for making the most of this Guide
- When you receive your annual commercial tax assessment, if you question it or are going to file an appeal, don't delay. In some states, you have only 60 to 90 days to file or lose the right to appeal.
- Remember that several factors can influence a change in commercial property taxes including a change of ownership or new construction.
- Ascertain whether your business is located in a designated empowerment or technology zone, which can reduce commercial taxes.