Business Property Tax Tips and Insights
 There
are a lot of expenses that are considered a cost of doing business.
Everything from marketing, to utilities, to the purchase of stapes and
paper clips can be considered a necessary expense. One expense in all
of this that cannot be forgotten about is your business property tax.
Who Pays the Business Property Tax?
Legally, the owner of the property is liable for the
business property tax. If you own the property, you pay the taxes.
Where this can sometimes become an issue is if there is a lease
involved with the property.
Many times the issue of paying
the business property tax is addressed in the lease agreement. If you
are leasing property for your business you may be contractually
obligated to pay the business property tax amount.
However, according to business tax
law, the property owner is ultimately responsible for making sure those
taxes are paid. If, for some reason, the business property taxes are
not paid, it is the property owner who will need to come up with the
payment. They would then have to try to collect that money from the
tenant.
What Determines the Business Property Tax Amount?
The amount of your business property tax is
determined by the assessed value of your property. That means that an
assessor will determine how much your property is worth, and you will
be taxed on that amount. In some areas that assessment is done
annually, while other areas may go years without having an assessment
done.
There are several different factors that could
influence the assessed value of your property, and in turn affect the
amount of your business property tax obligation. Some of those factors
are easy to get to, but some are based on the "best guess" of the
assessor.
Actual Cost of the Property
The
actual cost of the property is an easy number to come up with. The
amount you paid for the property is the actual value. If the property
was a recent purchase, this is probably pretty close to the amount that
will be used for business property tax purposes. Over time, that number
will be adjusted as property values fluctuate.
 Replacement Cost of the Building
If your building was completely destroyed, how much
would it cost to replace it with an identical building? This is amount
may be used to help adjust the actual property cost amount if you have
owned the property for more than a couple of years. It helps to adjust
for inflation and increasing property values.
Potential Value of the Property
As circumstances change in a community, so do the
property values, which causes the property tax amounts to change.
Property developments in an area could cause surrounding property
values to rise or fall. An increase in traffic to an area could cause
property values to soar. These changes could be used in assessing your
property's value.
Historical Value of the Property
If your property is in an area that has been
designated as a historical district, it could greatly affect the value
of your property. These values are largely determined by the assessor
and by the demand on the surrounding properties by investors and other
businesses.
The assessor will take all of these factors into
consideration in determining the value of your property. Once that
amount is finalized it will determine the amount of property tax your
business will owe.
Business Property Tax Obligation is on a Yearly Basis
By knowing what your property tax obligation is on a yearly basis,
you will be able to more accurately budget for your annual expenses.
Even if your business does not get an annual property assessment, it is
a good idea to have your own assessment done periodically so you can be
prepared when the adjustment finally comes.
To learn more about business property taxes, visit http://biztaxlaw.about.com/od/typesofbusinesstaxes/a/propertytax.htm.
Points To Keep In Mind
- Business property taxes are determined by the business's property values.
- Some areas assess property values annually, while other may go years before reassessing.
- There are several factors that can determine property values.
- The property owner is legally responsible for paying the business property taxes.
- Knowing the real value of your property can help you to budget for potential annual expenses.
|
