Property Tax Basics

Understanding property tax for business owners and investors

Property tax is a necessary part of owning any type of real estate in a jurisdiction with such laws. The amount of tax paid is often based on the value of the property. For investors, managing taxes is just as important as managing the property's value. Prior to investing, an investor should have a good idea what to expect come tax time.

Taxes on property may be something that must be paid, but the process and the cost does not have to be high. In many areas, there are tax professionals available to minimize the struggle of paying taxes or managing them. Keep these things in mind prior to using any service or product in regard to taxes:

1. Take the time to question real estate agents about property taxes prior to making a real estate purchase at least about property tax basics.

2. Investigate real estate property tax of other buildings and property similar in size and type to your own in the local area through public records.

3. Gather information about property taxes through trusted, local sources whenever possible.

 

Learn the local property tax rate

Finding the property tax rates may require a bit of research. Those purchasing real estate can gather basic information from their real estate agent. Public record searches at county and municipal offices can yield additional information regarding the current tax rate. Learn local taxation methods since these vary by state, county or municipality.
Try: Estimate property tax costs from available reports. The Offices of Real Property Services for the State of New York provides a specific methodology on calculating taxes. Most states have similar setups to help property owners understand the process. Contact a local tax estimator for the county or state to determine what the actual property value is and what the tax cost for it will be. The State of Michigan, Department of Treasury provides an online guide to calculating taxes.

Negotiate to change property tax law

Property tax laws for each region are dependent on a variety of factors including the current goals of municipal councils, the laws passed by county offices and by the ability of a company to show what they should pay. For example, government officials can help to modify laws if the company has a reason for it. Negotiating abatements and adjustments is possible in most areas.
Try: Change property taxation by being informed. Strafford Publications offers an in-depth, step-by-step plan for accomplishing changes in the way that taxes are paid by a business or investor. Commercial Property Services provides a look at what it takes to change property laws and provides professional assistance in making this happen for commercial organizations.

Manage taxes through property tax software

A variety of types of property tax software can be used to manage taxation. Corporate tax departments will need a quality product specific to the region to help minimize the cost of taxes and to ensure tax compliance costs are low.
Try: Take time to gather all necessary property tax information prior to investing in software to be sure the best investment can be made. Tax Compliance offers a range of information tools and resources, including taxation software and training for commercial businesses. The Tax and Account Sites Directory from AccountantsWorld is a complete listing of tax service professionals and what they offer. Business owners can utilize this tool to learn what options they have in taxation software for the business.

 

• Personal property tax and commercial property tax are very different. Investors owning a commercial business will need to hire a professional tax accountant to manage taxation. Investors owning rental property or other investment real estate may follow personal property tax guidelines. A tax professional is still wise to have.

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